This might not be ideal to get started but its a thought

New to Real Estate · NJ · Member since 2026 · 13 posts · 13 votes

Theres a duplex for sale in my area that is fully occupied. Tenants have been there for awhile, pay on time and maintain the lawn. They pay gas and electric while the current landlord pays water/sewer.

After taxes, water/sewer, and insurance, it comes in at a 7% cap rate at the listing price.

Buying this would have instant Cash flow, but would it be a solid first step to jump on being that I'm currently living in an apartment since September while waiting to see if other duplexes pop up or buy a temporary primary to renovate and BRRRR.

My minds all over the place with trying to figure out the best move and strategic route to take

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Mitch Messer

Lender · Playa del Carmen, México · Member since 2014 · 2k+ posts · 1k+ votes

6mo

Quote from @Ryan Hoehn:

My minds all over the place with trying to figure out the best move and strategic route to take

You say "After taxes, water/sewer, and insurance, it comes in at a 7% cap rate at the listing price."

That's interesting, but "cap rate" is not a rate of return to you as an investor.

I suggest you consider the cash-on-cash return (cash_flow / all-in_cash_investment) instead.

For cash flow, you'll need to also consider management (yes, even if you do it yourself!), maintenance, vacancy, and capital expenditures.

For all-in cash, you'll include purchase price PLUS closing costs AND any necessary repairs.

Run it this way and I bet this deal barely beats inflation!

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Nigel Jackson
Cincinnati, OH · Member since 2026 · 23 posts · 9 votes
6mo
If the numbers align and you have done proper due diligence, I would give it a green light. However, since you are planning to househack, this would require asking a tenant to leave their unit.
This issue is what I would factor in. Especially if you are planning on going the FHA route.
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Mitch Messer
Lender · Playa del Carmen, México · Member since 2014 · 2k+ posts · 1k+ votes
6mo
Quote from @Ryan Hoehn:

Theres a duplex for sale in my area that is fully occupied. Tenants have been there for awhile, pay on time and maintain the lawn. They pay gas and electric while the current landlord pays water/sewer.
After taxes, water/sewer, and insurance, it comes in at a 7% cap rate at the listing price.

Buying this would have instant Cash flow, but would it be a solid first step to jump on being that I'm currently living in an apartment since September while waiting to see if other duplexes pop up or buy a temporary primary to renovate and BRRRR.
My minds all over the place with trying to figure out the best move and strategic route to take

You say "After taxes, water/sewer, and insurance, it comes in at a 7% cap rate at the listing price."
That's interesting, but "cap rate" is not a rate of return to you as an investor.
I suggest you consider the cash-on-cash return (cash_flow / all-in_cash_investment) instead.
For cash flow, you'll need to also consider management (yes, even if you do it yourself!), maintenance, vacancy, and capital expenditures.
For all-in cash, you'll include purchase price PLUS closing costs AND any necessary repairs.
Run it this way and I bet this deal barely beats inflation!
1 Reply
Bryon AndrewsBusiness Member
Real Estate Agent · Saint Paul, MN · Member since 2018 · 201 posts · 104 votes
6mo
House hacking a duplex is one of the best ways to get started in my opinion. Keep in mind that we do not value 1-4 unit properties with a cap rate as they are residential properties. They will be valued based on comparable sales.
You can look at what your cash-on-cash return is to help determine if it is a good deal for you. Keep in mind that this is a long term investment. A large portion of my net worth has come from the equity that I have build up from my Minnesota house hacks that I purchased 7 years ago. Best of luck!
[email protected]715-892-4596
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Jaycee GreenePro Member
Real Estate Consultant · St. Louis MSA · Member since 2024 · 3k+ posts · 727 votes
6mo
Quote from @Ryan Hoehn:

Theres a duplex for sale in my area that is fully occupied. Tenants have been there for awhile, pay on time and maintain the lawn. They pay gas and electric while the current landlord pays water/sewer.
After taxes, water/sewer, and insurance, it comes in at a 7% cap rate at the listing price.

Buying this would have instant Cash flow, but would it be a solid first step to jump on being that I'm currently living in an apartment since September while waiting to see if other duplexes pop up or buy a temporary primary to renovate and BRRRR.
My minds all over the place with trying to figure out the best move and strategic route to take

Hey @Ryan Hoehn, welcome to the BP Forum! What's the asking price? How much do the tenants pay in rent? What is "market rent"? And how much money do you have for a down payment?
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