Hey everyone, this is my first post on here, and I was looking at creating a template to analyze owner-occupied duplex properties in Los Angeles. The reason for the analysis is to compare purchasing a SFR vs an owner-occupied duplex, both with conventional financing 80% and 85% leverage, respectively.
I'm having a couple of difficulties in this analysis and wanted to see how most members here tackle some of these questions: I have seen some posters on here note that you should underwrite the duplex as an investment property with both units rented, however, I am having a bit of trouble wrapping this around my head, because I am in fact comparing an SFR to an owner-occupied duplex and not other investment properties, how have some of you approached this and underwriting to an NOI? Any adjustments or tips here?
Also, I did want to factor in non-cash items to get my true ROI figure and had a couple of questions below:
Depreciation - the only use for depreciation here is improvement costs at 27.5 years per year depreciated, then taking 50% of that? The rest of the depreciation as a W2 employee is of no use correct?
Interest expense - when modeling this in, I would take 50% of my interest expense and subtract out of NOI and the remaining interest expense I would be able to model in as a deduction at my marginal tax rate?
Lastly, I know some of these questions are more tax based in nature than real estate and understand it is nuanced. Being in CA, are there any tips or links you might be able to share on some further insight to these questions?
Many thanks for all the help and looking forward to being an active member of this community.
