Home purchase strategy

[Gerrard Taylor]

Hello, I have been approved to purchase my first primary property (up to 350k). I live in  Detroit, Michigan. My original plan was to use this and buy and duplex and eventually turn it into a rental property. But the issue I’m having is I don’t have any experience in the game so I don’t want to purchase a property that would require heavy renovations. But the ones that are renovated when I run the numbers I don’t see much cash flow (around $200 per month). What is a good cash flow per month for a duplex ? And the duplexes has an huge price point (250k plus) from what previously sold in sometimes less than a year. Any suggestions on the best way I should use this home loan ? 

[Jimmy Lieu]

Quote from @Gerrard Taylor:

Hello, I have been approved to purchase my first primary property (up to 350k). I live in  Detroit, Michigan. My original plan was to use this and buy and duplex and eventually turn it into a rental property. But the issue I’m having is I don’t have any experience in the game so I don’t want to purchase a property that would require heavy renovations. But the ones that are renovated when I run the numbers I don’t see much cash flow (around $200 per month). What is a good cash flow per month for a duplex ? And the duplexes has an huge price point (250k plus) from what previously sold in sometimes less than a year. Any suggestions on the best way I should use this home loan ? 

Great question and welcome! I wouldn't focus on a specific monthly cash flow number as much as making sure the property still works after setting aside money for vacancies, maintenance, repairs, and future capital expenses. A duplex that only shows $200/month on paper can easily turn into negative cash flow if those costs weren't fully accounted for. Since this is your first property, I actually like your original house hacking plan. Living in one unit while renting the other is one of the best ways to get started because you can learn the business without taking on too much risk. If renovated duplexes in your area don't make sense at today's prices, I'd be patient rather than forcing a deal. You can also widen your search to nearby markets where the numbers work better. I've found that buying a solid property with light cosmetic updates is often a better balance than taking on a full rehab as a first-time investor. If you're open to investing outside Detroit, Columbus has been a strong market to look at as well with solid population and job growth, landlord-friendly laws, and there are still neighborhoods where buy-and-hold properties can produce good cash flow. Happy to connect and answer any questions you have!