I am new to real estate investing and want to buy a duplex. I want to live in one side for a year so I qualify for an owner-occupied mortgage and after that rent out both sides and buy another property to do the same. I figure even if the rental income only covers expenses and doesn't cash flow that I am still ahead because I will eventually own the house that my renters paid for.
I am looking at a duplex for $400,000. My estimated mortage would be $2400. The advertisement says each side will rent out for $2000 but looking at other rentals in the area I think the rental rate for each side would be more around $1600 which would total $3200. Using an online cash flow calculator accounting for all related expenses including maintenance and even property management puts me at cash flowing of $150 per month.
I did research on the owner of the property using public databases and determined that the owner is a physician who owns quite a few properties in the area and must therefore be into real estate investing.
My question is, why would somebody ever sell a property that is cash-flowing or even breaking even. The house is paying for itself. Is there something that I'm missing and should be suspicious of?
Read more: Should I be suspicious buying a rental property that's probably cash-flowing for current owner?
