Potential first property. Live in Duplex financed FHA. Thoughts?
Potential first investment property
Duplex: Both large 2 bed, 2 Bath, each has a garage, large yard, in single family neighborhood, separately metered, laundry in each, needs very minimal work, pretty much turnkey.
$340K - Potential purchase price
$11,900 - FHA down payment 3.5%
$2,432 - Monthly Mortgage (Includes: PMI, RE Taxes, Insurance)
$29,178 - Annual Financing
$3,500 - Monthly Rent (both units if I was not living in one)
$42,000 - Annual Rent
Operating Costs:
$3,264 - 8% Vacancy Rate
$4,080 - Management 10%
$2,040 - Maintenance 5%
$2,000 - Utilities Water and Septic
$11,384 - Total Operating Expenses
Annual Cash Flow: $1,162 (Note: Once I refinance the property in the future and get rid of the PMI of $228/month it will increase cash flow to $3,900)
Cap Rate: 8.92%
CoC first couple years with PMI: 6.51%
Budgeting for management costs but I will be managing the property myself for at least the first couple years.
Thoughts?