First owner occupant Duplex: Deal or No Deal?

[Noelle Yarn]

I am looking to purchase my first owner occupant duplex in Hampton Roads area.  When I run the numbers it feels like I'm missing something.  Could use some advice.

List price:180k

2b/1b in unit A and unit B.  Listed as renting for 950 each.  I would like to offer at least 20% off list but it is a new rehab so re agent says stay at list price (of course).  it is in a good location and I would use fha financing putting payments at 1170 or so. This would only be for a year and then rent out both units.

Any thoughts as to whether offer list and if not what would you suggest?  Is this a deal or move on?

[Brent Coombs]

Originally posted by @Noelle Yarn:

I would live in one unit for a year then rent it out for another 950 when I move. So total rental income would be 1900. I didnt think about trying to refi after a year though. Im also working on an inherited vacant property as my next investment.

But, you'll still have to live somewhere when you move, right (for how much per month)? If your current (and future?) living arrangement is cheaper, is the ONLY reason you're looking for an FHA loan because you're really trying to INVEST, but, you have less than 5% deposit?

If so, you'll only get ONE shot at it, unless you get a super bargain that'll gain you significant extra equity from day one (ie. NOT from a Turnkey Company or other market-price Sellers). And as has already been mentioned, getting (only) 1%/m gross rent return, when you're relying on close to 100% borrowed money at the same time - will mostly land you in NEGATIVE cash flow territory. [There's TWO Rules of thumb for you]. Good luck...