First Duplex Purchase
Hey Everyone, Needing some help on buying my first duplex (house hack). I have my pre approval ready and already working with a realtor. I am trying to be under 275k and don't really want to be in a bad part of town. Not sure if I should be going after the appreciation or the cashflow. Any suggestion or know of one I would really appreciate it!
Hey Wesley, the way I look at appreciation vs cash flow really depends a lot on your current financial situation. If you really need some extra income now, finding a cash-flowing property is going to be your best bet. If you have a solid income and are comfortable financially then finding a property in a good area that is likely going to appreciate would be a great strategy for delayed gratification (and profit). These properties however usually will have much smaller cash flow, or occasionally even operate at a loss. As far as avoiding bad parts of town, this is something your realtor should be knowledgeable of and if they are not, you should consider finding a different agent. Here are a few I found from the agent finder on this site, both of whom have good reviews and are active in the forums it appears.
@Wesley A Showalter
It depends on your personal opinion since this would be a house hack. It's where you will live. Unlike a normal rental, occupied by tenants, you have some attachment to it in that you will be living there yourself. Do you value a safer location at the cost of cash flow, or do you not care and are willing to occupy anything in exchange for cash flow?
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Real Estate Agent Ohio (#2021001448)
- (614) 412-4565
- https://www.reafcorealestate.com/
- [email protected]
@Wesley A Showalter
As a mortgage lender, I typically prioritize cash flow over appreciation for first time investors. The reason being is due to the metrics that I use to calculate good investments, as well as what the banks use to ensure that you have investment experience and are able to differentiate a good investment from a bad one. Appreciation is a fickle thing-- especially since many markets are starting to balance back out over the past two years of mayhem. Cash flow is a more concrete and allows you to grow your savings while getting accustomed to the accounting associated with owning investment properties. Accurate bookkeeping is essential to your investing success!
Of course, you should also prioritize your own safety and happiness since investing is a marathon and not a sprint. You don't want to be replacing your family heirlooms just to save some money now (think of the insurance premiums too!). Plus, your rate of appreciation is also tied to the neighborhood and demand therein; do you think that high crime neighborhoods will increase in value and demand rapidly? Work with your real estate agent to find a good area that you feel safe in and ask them the questions that you listed above-- they'll be sure to help!
It all depends if you need the money and what your future plans are. If you really need the money I would go for cash flow. Also, since you are going to be living there than your safety needs come first before the other two.
Look at your first property like a stepping stone. You'll most likely end up renting out both units to move onto something else 1-2 years later. Some properties don't always cashflow right away and can take 1-2 years before the rents match with the purchase price of the property for a 1% rule. I'd recommend cold calling owners in the areas you desire as well.
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Real Estate Agent OH (#2020004900)
- 614-698-1227
- https://www.reafcorealestate.com/
