A break-even duplex in CA has the potential to have high cash flow in just a few years due to the following 1) low prop taxes increase of 2%/yr 2) low turnover due to rent caps 3) 7-10%/yr rent increases 4) better tax shieldingThe real question is whether you’ve underwritten the duplex correctly.

Even if you have to pay more for the purchase think about the costs of carrying the real estate while waiting for the approvals  (debt service, property taxes, insurance, maintenance for the in-place tenant) and the additonal finance charges associated with originating an acquisiton/bridge loan and then a construciton loan at a later date. 

The rental market is very strong in Sedalia and the inventory for good rentals is low we have hundreds of people call in every month, and we always have a list of good qualified tenants just not enough listings.

Vacancy and maintenance factors should be higher than for Class A as homes will be older, have more deferred maintenance and tenants will be harder on them.Class C can be relatively successful with a great PMC (do NOT hire the cheapest!)

We had one deal fall wash out last year (and I only started in July last year) due to deferred maintenance.  

Why have the sellers not been able to sell in a market with very low inventory?   

Given your circumstances, the following advice and considerations apply:Benefit from low interest rates, no down payment required in most situations, and financing for up to four units when you take advantage of the VA loan.A thorough grasp of your budget should include the purchase price of the property as well as any possible maintenance expenses and other related expenses.

However, when we first visited prior to going live, we found that we had significantly more furniture / decorating upgrades and some cosmetic maintenance that weren’t in our original estimates.

So find a mentor or get into a house-hack (Low capital investment.)

There are plenty of tax deductions you will be able to take in your business such as utilities, repairs and maintenance, any advertising for the property, etc.