Need help on Duplex

[William Donnelly]

Hello all. I have an interesting Duplex i'm looking at purchasing and occupying one side for a year while renting out the other side.

One side is currently occupied by section 8 tenant who only pays $800, when the FMR is closer to $1300. Apparently HUD says FMR is $800 but this is not the case. Tenants lease is up Jan 2016. The duplex is high end 3br 2.5ba with garage and extra land for possibly building more units (The lot is 100'x250'). 2 floors with a garage and balcony patio for each unit. Travertine floors and high end fixtures throughout. Since its only a few years old it will not need any major repairs any time soon. Since it is high end, no updates or renovations will be needed either.

Purchase Price: $230,000.00

Year built: 2009

Income expense ratio: 1.13%

Gross Rent Multiplier: 7.37

Debt Coverage Ratio: 1.48%

Monthly income: $2600 (assuming both sides occupied and no section 8 tenant)

Monthly Expenses: $2070

Monthly Cash Flow: $530

My main question is: Since Ill be occupying one side for a year, will it be worth it to have negative cash flow for a few months to a year while the section 8 tenant is occupying and I am occupying the other side? Income will increase $800 to $1300 Jan 2016, and then income will increase again once I move out in a year. I also really like the idea of having extra land included with the purchase so that I may start new construction on more units.

Basically, is it a good plan to start with negative cash flow will owner occupant?

Thank you for reading