Assistance analyzing a duplex in El Cerrito area of San Diego, CA

[Ryan R.]

Hi All,

In advance, thank you for any and all help/advice you are able to provide. My fiancee and I have an accepted offer on a duplex in San Diego, very close to San Diego State in a great neighborhood. The terms of the deal would be we pay the downpayment (FHA 3.5%), and the sellers pay all closing costs. The purchase price is $615,000. Rents are currently $1,350 and $1,450 per month (with a projection of rents being raised to around $2,000/month each. We would be living in one of the units and renting out the other until we save enough to move on to our next property.

We have been working with our real estate agent, who has been investing in San Diego for quite a long time. His words exactly regarding this property are:

I'm trying to get assistance on whether this is a good deal. I understand that San Diego is not a typical market like much of the rest of the country, and that margins are much tighter here. That said, even though the cash flow is at best break even, there is the debt pay down, tax benefits, and appreciation (understanding of course this is speculation) to consider in our favor. 

With all that in mind, what do you guys think about this deal?