I bought a duplex in April of 2014 with the intention of living in one of the units for at least 2 years while the other unit helped to cover the note. This has worked very well for me, but now that I am approaching the 2 year mark in the next 6 months I am trying to figure out whether to sell the house and take the (small) amount of equity or rent out both units. I had always planned to rent out both units once I moved out, but it looks as if I may have misjudged market rent in my area. Here are a few numbers on the house:
Purchase Price: $301,000
Remaining Loan Balance: $285,000
Improved Home Value: $340,000
Rental Income: ~$2,700/month for both units
P&I: $1390/month ($450 principal, $940 interest)
Repairs and Maintenance: $135/month
Projected Appreciation: 1-2% per year
You'll notice I have not included the cost of a property manager in the numbers above as this would put me in the red every month. Regardless of whether I hang on to the property or get rid of it, I plan on moving to another city and buying another MF property with the hopes of getting a around 15% cash-on-cash return with cash flow. I feel like I've analyzed this scenario a million different ways, but I don't know which way sets me up for the best return in the future. All input is appreciated! Thanks!
When you move, who's going to take care of your duplex? you mentioned you didn't include the PM fees. You also didn't include any potential vacancies in your calculations. And your PMI is taking up a good chunk of your cash flow.
How old is the duplex, do you see foresee any major CAPEX coming up in the next 3-5 years?
And since your appreciation is projected to be only 1-2% a year, there is no point to break even on cash flow. I would sell it.
@Taylor Lacey sounds like you're struggling with analysis paralysis. This property has minimal to zero upside. Cut your losses and move on with your new strategy.
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