San Marcos, TX Buy and Hold opportunity - need advice!

[Timothy Edwards]

I am considering my first purchase for buy and hold and found a potential deal, but there's a caveat. I plan on living in one side of the duplex for the first 1-2 years. By doing so, I will "reduce" living expenses by $800/month. Here are the numbers that I have. I would appreciate any feedback from all the BP'ers that are out there.

Asking price: $82,000

Located 5 minutes from Texas State University. Hays County, projected to be THE fastest growing county in Texas based on state projections over the next 30 years.

MF 2/1 and 1/1 duplex. Built 1986. 1,400 sq ft. Natural gas. No central air (window units)

Taxes $1,400 year

*Price has come down twice from $89,000 since listed three weeks ago.

The neighborhood (short street actually) consists of homes 500-900 sq ft, with one MH at 1,200 sq ft. In the area surrounding this street, the only homes listed are in the neighborhood of $90k-110k. This one would price no more than $95,000 and would probably be pushing it at that price.

Rehab is minimal - paint and laminate flooring for interior, paint exterior and minor landscaping. Total rehab $5,000 worse-case scenario barring any unforeseen issues (offer would be contingent on home inspection, obviously).

Rent potential for 2/1 side of duplex $650-725.

Rent potential for 1/1 side (I will occupy for 1-2 years) - $450-500. However, the value of me living there versus present rental is $800 month as I stated previously. Am I wrong in factoring $300 cash flow based on this reduction in living expense?

Based on the asking price having been adjusted twice in such a short time frame, the seller apparently wants out sooner rather than later, and has room to move on price.

Assuming I can get them lower, what price pencils out to where this is a good long-term investment?

I need a fresh set of eyes - way to much eraser math done already and I'm afraid I've lost perspective. I apologize in advance if I'm leaving out key information; like I said, this would be my first REI and just needing some advice.

Thanks in advance!

Tim