Two deals, two set of questions

[Chuck B.]

I posted a while back about trying to sell my monster old house (3,915 ft). It appraised in 2010 for 350K but I was hoping for premium money at 400, then 375, and then 360k. Its currently used as a duplex and I rent the 1Br 3rd floor for 700, which is a little low. I got a commercial lease offer and negotiated my way out of the house. I rented it for 3,050 a month for 39 months. The new tenant also pays taxes and insurance on top of that prorated each month (adjusted yearly), and $420 a year to have the three HVAC systems serviced twice yearly. They have a three year renewal option with an increase of CPI over the first term. I bought the house for 175K 10 years ago and have another 40k in improvements done since then. It's zoned OR, which is an older zoning that allows either residential or office use. My PITI is currently 1485 a month but a refi is bringing it down to 1200 a month. Total tenant pmt is 3452 a month and I got three of those up front for first month, last month and damage deposit.

It seems like really good money, do you think I did OK? And, what would be a low and high end sales price for it now that it's rented commercially (offices, actually).

2nd deal: I've had my eye on a nicely fixed up side-by-side brick duplex for a while. There's a 2br, 1.5 bath 1,000 ft unit and a 3br, 1 bath 1250 ft unit beside it with a 750 ft unfinished basement. They're barely attached, sharing one corner that used to have a door between them. Clean working class neighborhood with most houses from the 40s to the late 50s. The current owner has had it listed for 175k for most of a year. It appraised for 167k a year ago. New HVACs, new roofs, new hardwood... Move in ready, but what I'd call "nice" rental quality (no granite or fancy details). The units rented most recently for 600 and 800 respectively, but both should be 50 to 100 more. His last tenants destroyed the place, which is why everything is so new now. he was gun shy to rent again.

I negotiated a 1200 lease on the whole place and am subletting the 2br to my longtime tenant (yes, I'm taking her with us when we move) for 700. I also negotiated an exclusive purchase option at 155k for the next year, so I can save for a few months to make a down payment. My thought is that I'd buy it owner occupied with a 3.6% 30yr loan and live in the bigger unit for a couple of years. This should take the PITI to 900 at that time (20% down).

Now, my question on this is a bit loaded. My other SFRs were nice homes in bad areas. Not terrible streets, but not great areas. Not war zones either though. They ran 35 to 55k (all in, with some light rehab) and rent sec8 for 725 to 925 a month. And they're good tenants for the most part. The reason I'm interested in the much more expensive duplex is I want to diversify. I'm afraid of continuing to buy in shady areas, and who knows what happens to sec8 in the future. . Plus, I really won't mind living in half for a while. The quiet neighborhood will be a nice change from my current urban location. My thought is that I'll move out in a couple of years and keep it for rental.

Am I stupid to consider buying the duplex? Should I double down on sec8 properties? Are the numbers bad?

Best,
- Chuck