Seeking Opinion on a Deal

[Youssef Labib]

I am a newbie investor who wants to invest for the long term and wanted to hear from all the experts here. This would be my first deal, so all help is appreciated.

I came across this 200k SF house in a high appreciation and low-income market that is cash flowing around 30% after all expenses (which is very high for this market). The house has been divided into 3 separate units (hence the high cash flow).

It will need around 20k of work over the next couple of months to fix (some bouncy floors but no major cracks, rats problem and general remodeling) but is not urgent or life threatening.

My concerns are the following:

1. What due dilligence do I need to ensure current tenants won't be a future problem?

2. I was told I won't get as much appreciation from the house as is due to its configration. Is that true? it feasable to assume I can always add it all back together if I am ready to sell to capture appreciation?

3. What other risks should I consider in a situation like this?

Upside:

1. Two garage spaces are not utlized. I can fix them a bit and add to one of the units and raise rent.

2. Collect high cash flow in an appreciating market then whenever I am ready, put in some money (say 10-15k) when I am ready to sell, refinance or rent as a single unit to capture appreciation.

Thank you!