Looking at First Investment Property -
Alright, so my realtor and I found a decent enough place. Its a duplex with 6bedrooms and 4 baths.
Sticker price is 225k (which is scary for me)
One side has tenet that has lived there for 9yrs and is currently at $929 a month and Ill live in the other side and rent my current house out.
We will be doing a 3.5% down with a 30yr note.
My lendor said in closing we could negotiate that the other sides rent needs increased prior to closing (market says it should rent between $11-$1200 and I was thinking of just bumping her up to 1k and in a year rent out the other side for $1200. My payment would be 1600 a month on this place including insurance, taxes and pmi - i would potentially clear almost 600 a month
Im a little unsure of this one considering the price. If for whatever reason one side ends up vacant and my former house ends up vacant Id be looking at an expense of $2300 till I got some tenets in.
I roughly make 55k a year and have about 20k in savings (minus 7k for the down-payment)
Would/does this seem like a smart move acquiring this place?
Since this is a year ago I curious if you went for it or not. There is always risk associated with a rental property but since you will be living in one side and renting the other the potential increase in cost would be whatever your combined mortgages are minus what you have been paying for your current place.
We did a similar deal in Kansas. We bought a nice $250k duplex. We lived in one side and rented the other side out. While we were there half rented for $1350 and we could have only paid $300 a month but we acted as if we were renting it as well and put $1350 into the checking account we were paying the mortgage out of. So $2700 was going in a month and $1670 was the payment out. By the time we moved out 1.5 years later it had $12,000 in the account so there is plenty of cushion there for when there are vacancies. The likelihood that all places will be vacant as once decreases as you get more properties. Just be sure you have a sufficient reserves to cover a few months and some repairs and you should be fine.