Buying an Owner Occupied Property with Negative Cash Flow
I have been reading a lot on what makes a deal a "good" deal and also about the 50% general rule. I do have a general question about this as it relates to owner occupied real estate properties:
I plan on buying a duplex that I myself would occupy with my family and then would rent out the other unit. For an example, let's say the property I'm buying is worth $200,000, but was able to buy it for $180,000 and I put $6,000 down payment on it, so my loan would be for $174,000. Lets say this works out to $1,000/month P&I.
So now let's assume I can get $1,600/month for the second unit property. Using the 50% rule, $800 is for expenses and then $800 is left over. This would produce a negative cash flow of ($200.00)/month. Which is obviously the opposite of what your looking for in a rental property.
Is this still a good investment? The way I figure it, I am looking for a house to live so I am obviously expecting to pay a mortgage. I'll pay the $1,000/month for the mortgage like I would expect, and keep that separate from my investment. This means I would have $800 cash flow after the 50% rule if I separate the two.
Does anyone else have any advice when it comes to owner occupied investments of what make a deal a "good" deal? I think it would be tough for me to afford a triplex or a 4-plex. Things are expensive here in MA....