1st Generation (hopeful) Homeowner-advice on a duplex?

1 Reply

Hi! I just opened escrow on a duplex in Los Angeles (zip code 90037), for $610,000, I am freaking out! I've used the rental calculator, read "How to Buy a Duplex" guide and many other posts but am having some serious, serious anxiety about this potential purchase. It's like when I see everything together (the numbers, my financing, living situation, job status, etc.) it all feels a bit overwhelming. How do I know if this is the right decision?!? (Maybe these are normal first time buyer nerves, and I just want someone to tell me it's going to be okay (or not okay). I've listed some basic details below, let me know if any additional information would be helpful. I would love to hear your thoughts on my situation-advice, suggestions, good or bad, and overall encouragement or discouragement welcome! Thanks for reading!

  • Property Type: Duplex (two 1+1 units)
  • Cots: Asking: $610,000, Offered: $605,000, Accepted: $610,000
  • Text from the original listing: Unique Money Maker 6.1 Cap rate. Vacant duplex ready to make money. This is a beautifully remolded duplex boasting 2- 1 bed 1 bath layouts. property was built in shotgun-style/straight line construction. Both units share a wall that is currently open to make this a great AIRBNB, college rental or Short-term rentals. You can lock the the joining doors to separate the units for long term rentals. New exterior paint, Interior, new Kitchen features, new windows, Refinished original hardwood floors.
  • Location: Los Angeles (zip 90037), 2 blocks from USC campus and Expo train stop that runs into DTLA and all the way to Santa Monica beach. Walking distance (.07 miles) to the Coliseum, new soccer stadium, the Natural History Museum and the soon to be opened George Lucas museum (literally 2 blocks away)
  • Financing Details: I'm going FHA, pretty basic credit only qualify for a 4.307% interest rate.
  • Estimated Total Monthly Payment: $4,191 (subtotals listed below
  • Monthly Principal & Interest: $2,990.82
  • Mortgage Insurance $417
  • Estimated Escrow: $783 (includes property taxes and homeowners insurance)
  • Estimated Closing Costs: $20,122 (Includes $15,987 in Loan Costs + $4,135 in Other Costs - $0in Lender Credits)

About Me: Young professional, single, no kids. Steady income, net $120,000/annually + ~$10,000 in consulting income. Have $100,000 student loan debt, I'm going FHA so will have to pay PMI for 6 months until I refinance.

My general thoughts: Not sure if I'll live in the property or rent both sides. Currently paying $2,100 in rent. My biggest concern is that the property only has doors separating the two sides and so I don't really want to live in that close proximity to tenants and I don't want/have any money to invest upfront in renovations (like closing off the doors into something more permanent). I'm in love with the location of this property and all the nearby attractions. The vacancy rate in LA is low, proximity to the college combined with high rental prices, make me excited for it's rental potential. Based on my renting experience and current rents in the area I could probably get $1,800/unit but would really like to list them for $2,100/unit. That might be unreasonable though

Would love your thoughts!

Hello! If you provide the address I can see how that pricing looks. Are you allowed to get an fha loan and rent both sides out? I thought you had to owner occupy for fha? Also, you may want to look into Airbnb rentals as I know they are more strict on if the unit "qualifies" for Airbnb. Los Angeles has been strict with that!