Buying my first duplex, confirming my numbers
Hey guys. First time home buyer with a young family looking for a multi family home financed with an owner occupied FHA loan (Maybe 203K). I've lived in South Florida for 4 years so I have a decent understanding of the area, but I'm not from here and still have lots to learn about the market I'm living/investing in. But my post is mainly about checking my numbers and expectations for what/where I can afford. I would love your input!
By nature I'm very conservative with money bordering on ridiculousness so please forgive me when I play that out down this post. I'm not looking to break the bank with my first investment, I think I'm pretty realistic. I'm looking to buy and hold and make passive money that adds up over the years. My main goal is to purchase a second duplex and continue on as much as I can so I'm really just looking to not make a mistake out of the gate. I'll be as patient as it takes.
I realize I'll likely not cash flow in that first year since I'll be living there, but once I move out I'd be happy with just a few thousand dollars profit a year when comparing only my mortgage against my income from tenants.
But I want to ask the question, what is a reasonable cash flow to shoot for on a duplex once both units are filled...in terms of percentages? I figure each market is different so I really would love if some of you with experience in South Florida could give your opinions on that.
From my research, I'm seeing 300K on a Duplex in Broward (Davie, Cooper City, Weston, good parts of FTL & Hollywood) is the bare minimum I could expect to pay for a decent duplex. At that price point, it seems I could get anywhere from 1100 - 1500 per unit in rent.
With 4% down, I'm estimating that would be about a 1300 mortgage + taxes and insurance which I'll add up to 2000 each month as a payment. So on the low end the income would be 2200 and high end 3000 in rent. This works for me, but doesn't get me excited on the low end. I'm aware of the 50% rule but that seems hard to expect on a Duplex in this market. Please poke holes in my numbers/logic where you see them, that is the help I'm asking for!
I'm not sure of how much I can extend myself beyond 350K on a duplex considering my finances. I keep a tight budget and expect to have no less than 20k set aside for a down payment by the summer of 2018 when I'll be ready to buy. So obviously I'm in need of an FHA loan. Between my wife and I we bring in just over 7K a month in cash for about 84K a year. These numbers likely will go up over the next few years, but not drastically, and I want to assume they stay there for conservative reasons. We both have credit over 700 and have no debt. We get by comfortably each month paying rent of 1500 each month in a condo in Sunny Isles, saving over 2K a month.
So please let me know if I'm seeing the right things or if I'm way off track. I just learned about BP podcasts a couple months ago and everything seems so logical and realistic. I don't see why i can't do this. Seems like a no brainier to buy a duplex as a first home purchase so I'm trying to make this happen. In the future I hope to meet up with you guys and network a little. I appreciate you guys reading this!