Hi everyone! I am totally new here, so I hope you'll excuse my newbie-ness.I am located in Southern NH (about an hour north of Boston). I've been looking to buy a home for myself and my two boys. It's been very difficult to find anything in my price range, which for a single-family home is $275k. I've already lost out on a couple of fixer-uppers even though I offered above asking and little to no inspections. Also, I'm trying to stay in my sons' school district - which is rural and has little to offer for homes in my price range.An opportunity to buy a 1985 duplex just came up. It's listed at about $325k. Each unit has 2 BR and 1 1/2 BA. It's a mirrored-floorpan townhouse style with 2 floors and walkout basement in a nice country setting. The yard is manageable for me at less than an acre. My mortgage broker says I would qualify and we will finalize a pre-approval tomorrow. I saw one side of the duplex with my realtor today and aside from some minor updating, it seemed fine. The other tenant wouldn't allow us access with several days notice, so my offer would be contingent on that and condition of the unit. (Red flag regarding that tenant not cooperating.)I'm attaching what I got from the calculator. I treated it as if I were not living there, but technically the rents for this place should be $1600 and $1500, according to both realtors (mine and seller's realtor). Currently, the tenants are paying $1100 and $1200. I'm not sure why this is, because there is a shortage of rentals here. So, if I'm reading right, as investors, you all like to have the Cash on Cash ROI be over 12%, right? But if I live there, is it okay that it's just shy of 8? (I was generous with the expenses estimates.) I really just want to be able to subsidize some of my own "rent". My mortgage payment for the whole thing is estimated at $2238/mo from my mortgage broker fees worksheet. Any thoughts would be so helpful! This is a big step for me and I'm nervous. I'm also not a numbers-whiz, but I'm trying. Do these numbers work? Thank you!

I personally think this a great idea. I’ve recommended my kids starting out like this instead of a SFH. After you build enough equity you could always go out and buy that SFH you want and rent both sides out.

@Chris Hanisco Your the Woman!!!!! I love your train of thought. I would be a big Go on this decision if after your assessment that the rental market is strong in that town I am saying a Go with the understanding you're going to live in one side. Your monthly savings will be HUGE compared to buying a SFH with no additional income, and/or renting. Since you will live in one side, being a landlord will be easier on you but even as a landlord you will have a lot to learn. But hey its supposed to be that way. You absolutely will feel nervous on your first rental buy, guaranteed and it is normal. Mr doubt is 10 feet tall and Mr. Optimism is about 6 inches tall. After this buy and 1 year down the road, your going to slay Mr. Doubt. Your will be nervous for a few months but find yourself a mentor and pick his or her brain for the cost of a cup of coffee, no more than that. I mentor several your investors here in Austin. I love what your doing and if you have any questions or need a little motivation, PM to get my cell and we'll talk. I love investment real estate and duplexes are my specialty. Cheers!!!!

@Shaun Weekes you are correct on the FHA but in this case, I like the idea she is putting 10% down. It will make her monthly payments easier, she still has reserves left over to do rehab if needed and she is a lot closer to building 20% equity that will eliminate PMI. The rental game is cash flow and the faster her cash flow builds the more confident she will become. Confidence is paramount in this game and life itself.

This is all great work. The only thing I would strongly recommend is looking into an FHA loan. Since you're going to live in one unit it will be considered owner occupied. This will allow you to put down 3.5% instead of the 10% percent that your numbers show. This will save you almost 20K and no matter what you invest in cash is always king in my opinion. FHA does have a rule that states that the market rents of all units must be more than the P.I.T.I. (Principal, Interest, taxes and insurance) which you will for sure be able to cover. Just giving you another option. I hope this helps and have a great night.

If you plan on living in one side, make the offer contingent on the existing tenant (of the side you want to live in) be out of the unit before closing. This, of course, depends on what the current leases are. When making the offer, make sure the offer includes that the seller provide you a copy of their schedule E (the tax form they file that includes expenses and income on the property) and a copy of the existing tenants' leases. Good idea of having someone help pay your mortgage. Good luck!

Regarding the tenant next door: You have a lot more latitude as a landlord when you live in the property in NH. So once you buy it, should the tenant be uncooperative, consult a NH real estate attorney specializing in landlord/tenant. The numbers don't look good if it were a straight investment, but as a starting point and a place to live inexpensively, it will likely work. All my rental properties are in NH, so if you want to talk about this separately, send me a colleague request. One point: Your maintenance costs are likely to be FAR more than you have allowed for. By thousands. So keep funds in reserve.

@Chris Hanisco I would definitely recommend viewing the other unit before making an offer because if you do not get a good feeling from the current tenant you can always write up an offer with the home vacant upon sale.

Hi Chris, Regarding tenant not cooperating, it could be just a messy dirty house and the person wants to clean it up so they don't look like a slob. Hardworking people's apartments don't always look like the maid just left (because they are tired from working when they get home), but a lot of them like to keep up appearances for others. Things like do the laundry, clean the kitchen up, make the beds, pick up after the kids, etc... Good Luck!

Even if it doesn't pay the entire mortgage, it pays a good chunk of it and you have another source of income. Make sure you save part of the rent for taxes and repairs. I agree with the others that if after viewing the rental unit, you aren't comfortable with the tenant, write the offer such that it is vacant upon possession AND inspecting the vacant unit before closing to check the condition.

Hi @Chris Hanisco. Awesome that you're looking into this. My wife and I similarly just bought a duplex just north of Boston that was owner occupied with one tenant. The tenant staying there was paying $900/month, but market rent was about $2000 per month. She had been living there for 13 years and the owner never raised the rent. We knew that raising the rent more than double as soon as we bought the house would not go over well, so our attorney advised us to buy the house contingent on the tenant moving out. She was living month to month and the seller was motivated, so for us, that wasn't too much of a problem. The tenant found a new place and moved out a few weeks before we closed. I don't know the specifics of your situation, but I hope that at least shows that option is possible! Good luck!

Single parent - Should I buy this duplex and live in half?

Chris Hanisco

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Rental Property Investor · New England · Member since 2010 · 86 posts · 75 votes

7y

Originally posted by @Richie Davis:

@Chris Hanisco It looks like a great opportunity for you to get your toes wet with investing in real estate while still being able to meet your family needs and wants. You will gain an inherited tenant so there is a lot of learning to do in regards to being a land lord and you will need to make it happen pretty quick. Im sure a tenant would love top not have to pay a month or two rent because they no longer know who or where to pay so you have to get that handles right away. The last thing you want is to be knocking on doors asking where the rent money is. I bought a duplex with inherited tenants a few months ago and the learning curve has been very steep. I would recommend getting all their lease info ASAP and sitting down with an attorney that is familiar with real estate! It doesn't cost nearly as much money as you would think and they can save you a ton of money and headaches in the future. If you would like to know detailed information on the programs I use or would like any other advice, please don't hesitate to DM me. I would say this deal is a GO just like everyone else has stated!

Thanks! They are actually month-to-month. My offer was accepted today. I'm doing a walkthrough on the other side this weekend and inspections on Wednesday. I have the contract stating that it be vacant.

Single parent - Should I buy this duplex and live in half?

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