Hello fellow mustachians. I currently have one rental property and am looking to acquire another I currently rent my primary residence. My goal is to acquire a primary residence with a low down-payment of 3.5-5% to live in with plans to move out and rent it after a year. My rent is currently is $950 and my fixed costs with factoring in costs for the property I am evaluating would be $1,100 per month. So my opportunity cost is $1,800 a year.
Property: 3 bedroom, 1.5 bathroom home in a high end area with great schools for $145,000. Rent for similar homes in same area is $1,600 but I am factoring in $1,550 because I like to be on the safe side.
So I am raising my living expenses for 1 year to acquire a rental property for cheap. When I rent it out my cash on cash return would be 18% and generate an income of $240/month (after fixed, variable, vacancy, & maintenance expenses)
I am aware of other strategies like rent the rooms & use the same method with a duplex etc. However, my market is tough and have researched it extensively. Renting rooms is an option but would rather not live with a stranger.
What does the mustachian community think of this as it is raising living expenses?