Duplex needs to meet 50% rule??

[Thomas Brady]

Hey Everyone, 

I have been looking at several duplexes over the last month and have a question about the 50% rule and location. 

I won't bore everyone with the calculations, but after my mortgage and the 50% rule, I am only cash flowing between $50-100 per month. (although they just put a new roof on and the current Hvac is in good shape, so capex may not hit for a awhile) I am also putting 5% down and using an FHA loan, so I'll be living on one side for a year. The $50-100 is when I move out.

Normally I would look at a property like this and consider it a sub par deal, however this duplex is in a GREAT location. I'm talking A to A+ location, so I simply don't see the property value going anywhere but up (over the long run of course) my uncle bought a house around here about 20 years ago for 60k and today it is worth over 250k.

My question is if anyone has any advice on buying a property with lower cash flow in exchange for a fantastic location. I have looked at some great cash flowing duplexes, but they are in less than desirable locations. If anyone has any experience with a situation like this please let me know. 

Thanks! 

[Brent Coombs]

@Thomas Brady, you said "after my mortgage and the 50% rule, I am only cash flowing between $50-100 per month", whereas your theoretical 50% expenses would INCLUDE your mortgage. Also, with a duplex or larger, often the net return is better than 50% because of increasing economies of scale. Cheers...