Second Opinion on Duplex Numbers

[Kyle Brown]

Hi Everyone,

I have been analyzing a duplex I am very interested in and I think I am at that point where I have "analysis paralysis" and am looking for some feedback and advice. This will be my first investment property. The duplex is in South Jersey listed at $132,900, taxes around $5,356. I will be using FHA to purchase this so minimal 3.5% down. FHA also means I have to occupy the property for a year before I can rent out the second unit. So, with that being said, my goal is to have a ROI of 10%+ and a positive cash flow. These units can be rented out for easily $800/month.

Year 1- If I can purchase the duplex for $110,000, put 6% down, charge $800 in rent for the first year for one of the units, I will have a 9% ROI but not a positive cash flow.

Year 2- Once I am legally allowed to rent out the second unit, I will have a cash flow of about $415 a month and a ROI of 17%.

These numbers do not meet the 2% rule.  Please let me know your opinion, advice, or anything you may see that is not correct, that can help me out.  All feedback is appreciated!