I have good friend from Boyle Heights.When he was starting off he did the same thing you are talking about with his first purchase. When he started a family he rented both units,which were cash flowing well, and moved into a nice suburban home . He has several rentals now. Lots of headaches with them too …but he is doing pretty well.

The sacrifice you make by living in one as opposed to renting or buying yourself a nicer private place is a great hedge, your cash flow will be very good. I think it will work out well for you.

I have good friend from Boyle Heights.When he was starting off he did the same thing you are talking about with his first purchase. When he started a family he rented both units,which were cash flowing well, and moved into a nice suburban home . He has several rentals now. Lots of headaches with them too …but he is doing pretty well.

The sacrifice you make by living in one as opposed to renting or buying yourself a nicer private place is a great hedge, your cash flow will be very good. I think it will work out well for you.

Based upon my valuation with the basic assumptions that you provided (165K, 15% down, 1.7K in rents) along with very conservative future revenue and expense assumptions, along with a five year sell scenario, I can get an IRR of 11-12% which includes a passive activity loss yearly and positive cash flow, but, I can’t seem to get the capitalization rate north of 8% without really knowing the area that you are considering and the condition of the property. Most investors require a higher capitalization rate, but if you manage the rents properly and keep your expenses in check (including managing the property yourself if you are able), you can get that capitalization rate closer to 9%. Good luck.

Based upon my valuation with the basic assumptions that you provided (165K, 15% down, 1.7K in rents) along with very conservative future revenue and expense assumptions, along with a five year sell scenario, I can get an IRR of 11-12% which includes a passive activity loss yearly and positive cash flow, but, I can’t seem to get the capitalization rate north of 8% without really knowing the area that you are considering and the condition of the property. Most investors require a higher capitalization rate, but if you manage the rents properly and keep your expenses in check (including managing the property yourself if you are able), you can get that capitalization rate closer to 9%. Good luck.

Based upon my valuation with the basic assumptions that you provided (165K, 15% down, 1.7K in rents) along with very conservative future revenue and expense assumptions, along with a five year sell scenario, I can get an IRR of 11-12% which includes a passive activity loss yearly and positive cash flow, but, I can’t seem to get the capitalization rate north of 8% without really knowing the area that you are considering and the condition of the property. Most investors require a higher capitalization rate, but if you manage the rents properly and keep your expenses in check (including managing the property yourself if you are able), you can get that capitalization rate closer to 9%. Good luck.

We really need a lot more info before giving you much advice. What is the neighborhood like? Are you in it for the cash flow or is there much appreciation potential? Rent control? Are you ready to become a landlord–handyman skills, thick skin, flexible hours, legal savvy, detail oriented? A lot of newbies underestimate the job.
In your favor is today’s remarkably low interest rate environment, especially as an owner-occupier of 1-4 units. The rate jumps for apts of 5 or more units, giving you a competitive advantage.

We really need a lot more info before giving you much advice. What is the neighborhood like? Are you in it for the cash flow or is there much appreciation potential? Rent control? Are you ready to become a landlord–handyman skills, thick skin, flexible hours, legal savvy, detail oriented? A lot of newbies underestimate the job.
In your favor is today’s remarkably low interest rate environment, especially as an owner-occupier of 1-4 units. The rate jumps for apts of 5 or more units, giving you a competitive advantage.