New looking to buy first duplex

[Michael Thomasson]

Hi, I have been reading up on real estate and listening to podcasts for about a year now and think it's time to take the first step towards real estate investing. I am moving to Corpus Christi in February and am working with a realtor. I am currently looking at a duplex for 290k on North Padre Island. I am sure I could get 1650 to 1800 per side to generate cash flow, but insurance costs in the area would add about 7000 dollars a year to operating expenses, greatly limiting returns. I plan to hold the property for several years if I purchase, and let appreciation do most of the work. Should I go for this property, or keep looking? Anyone with particular experience in Corpus Christi or in coastal water properties with high insurance costs, how did you account for those ever increasing costs and was it successful? Thank you, -Mike

[Brian Bistolfo]

@Michael Thomasson I'm invested in Corpus; cash flow is great there but never "count on appreciation to do most of the work", especially not in Corpus (appreciation there is very low) and during a bull market.  If you're planning on selling in a few years for more than you bought it for then you'll need a forced appreciation strategy.

I shoot for 1% rule or better on a high-end property, and would go 1.3% rule minimum on lower-end, older, or multifamily.