I recently purchased a duplex to live in half and rent out the other half. I am also managing it myself for now. Below is a breakdown of the numbers for the property. You will see that the cash flow for the property is negative and might ask ‘why would you buy it if it had negative cash flow?’ Well… It is a nice property in a good neighborhood, the type of tenants I hope to attract are long term headache free tenants. Also I needed a nice place for my family to live and the total price I am paying after receiving rent is significantly less than what it would have cost to get a place just as nice and the same size so it met my current needs. In addition to this I still have a job so the tax deductions are important to help reduce my taxable income.
Purchase price: $166,500
Down payment: $8325
Interest Rate: 4.125%
Closing costs: About $1700
Current rent: $750/side $1500/total
Market rent: $850/side $1700/total
Property management: $1700
Monthly Costs: $1825 including mortgage
Monthly Income: $1700
Monthly Net: -$125
Additional considerations: Mortgage interest deduction and Depreciation
Books that helped me: Who Moved my Cheese, 4 Hour Work Week and one of Robert Kyosaki’s books.
Podcasts I listened to that helped get me started: BiggerPockets, InvestFourMore, CashflowGuys, WheelbarrowProfits and Rental Rookie.
Let me know what you think of my purchase and my analysis of the property.