Duplex Buy and Hold Strategy- Appreciation

[Amir B.]

Hi Everyone in the BP Community,

I am looking to purchase a duplex as my first property. I am looking to house hack. Unfortunately, I live in California and no way of living for free. The plan is to have the tenant pay down the monthly mortgage payment. 

My price point is $400,000. I am planning on using a FHA loan using 3.5% down payment.

I am looking in Sacramento county. 

My question is would someone buy in a more desired area or cheaper? One duplex is $290,000 and the other is $410,000.

Please advise.

Thank you. 

[Account Closed]

It's tough to see appreciation in small multis, even in good areas. One reason, there are less comps because there are likely not many duplexes in that area to compare   (most duplexes sit on a corner in Sacramento city due to zoning restrictions). Secondly, and partly because of reason number one,  there aren't many multi sales in the good neighborhoods to compare, either.  Personally,  I would always buy in the better neighborhood because you can charge more for rent and have a larger tenant base to choose from. It's been my experience, if you have a quality product for rent, renters will be salivating to get in. There's not much good inventory for highly qualified renters out here. With multis, it's more of a cash flow, debt paydown, and tax play versus an appreciation play. Feel free to PM me if you ever want to talk specifics about Sacramento.