Hello brand new! Ready to make a deal!

[Joseph Erjavec]

I know some people say they hate their job. However, mine is dangerous + it is at times morally/ethically questionable. It has bothered me enough to pursue financial independence and to pursue another career (land lording). I also want the cash flow for hopefully ER one day.

Now some information about myself, I am in my 30s and gainfully employed. I make 70kish dollars a year with unlimited overtime. I live in the best neighborhood in a 60ish mile radius. I’ve purchased 1 home and now a duplex has come up for sell next door to me. That's the purpose of this post. The following are personal financials to help you make a better decision. Skip down if you want to get to the meat and potatoes.

• My net worth $23,795 not including house #1
• 41k mortgage on house #1 mortgage is $650.00 month 10 year
• $0 other debt
• 10k cash
• 52k 457 plan
• 5k spilt between taxable account and Roth
• Monthly bills utilities + mortgage is $1095.00
• Car is paid for with 90k miles, reliable, and maintenance is done on it.

House #1

It is currently being lived in and could easily rent for 900$ monthly.

This place will need 2-3.5k worth more of renovations but it can wait awhile before it would become any form of an issue.

So I purchased a 2-3bed 1 bath with a nice flat yard with 3 parking spaces house for 59k put 15k into it. Due to the high quality neighborhood and school district (think best in 60-mile radius). The same realty agent who sold it to me told me she would put it back on the market for 100-120k depending on the speed I wished to sell it after she saw the renovations.

This house was purchased with it being a rental in mind. Now I have this opportunity on the duplex next door. Our parking lots touch and so do the yards with a small fence between.

House #2

Interest rate :3.750%-4.750%

I want an owner occupied mortgage. However, I have one on my first house and am wondering if that will be a conflict with me moving to the new address?

5% down 5450.00$

0$ for improvements!

Budgeting 500$ for inspection (should be less) and 3500$ for closing could be slightly less also.

Per-unit market rent: Unit 1 is renting for 650$, unit two is renting for 425$ for this place in this neighborhood this is drastically under rented! I could see as much as a 300$ increase on unit 1 and a 100$ increases on unit 2.

Vacancy/Loss Rate: going with 5% This area is in extreme high demand due to the lack of housing and the quality of the neighborhood and school.

Property Taxes: 1,325.00 $ per year

Insurance: about 900$ a year

Maintenance and Repairs: going with 1000.00$ per year. I doubt it will be this high due to condition.

Property Management: managing it myself due to it being next door to me. Paying myself 10%

Water and gas: I pay 50$ on each so 1200.00$ a year anything over 50.00$ per month the tenant pays.

Lawn Care: my yard literally connects with this place next door. So it will just add 20-30min cutting time for me. just writing it off as yard work.

putting it together: shooting for 107k purchase price. +5950.00$ inspection & closing

total :112950.00$

1075.00$x12=12,900rentx.09=11,610.00estimated vacancyx12=139,320/112950.00=1.233 nice?!

My concerns: We want another home eventually sadly the distance from our jobs and of family kind of locks us into this neighborhood + this is where we want kids to go to school think five-year plan. However, I have serious concerns for the lack of diversification. With house 1 and 2 being valued at over 200k that is a very large chunk of my portfolio to be locked into real estate in one neighborhood.

So with our retirement home being located in the same neighborhood I’ve got serious concerns in the long term with having 400k+ being locked in real estate in one neighborhood.

We could sell something at the time but then lose the cash flow and it's what I am really after.

Home 1# could be sold easily home #2 not so much it being a duplex and I am always looking to have another way out.

Thing that make me happy: it's all located in one place, I love the area and believe it to be a good investment.

Your thoughts?

Is house #2 a good idea?