Is this a good deal?? Triplex analysis for buy and hold

[Juan Abreu]

Hey guys, 

I'm looking at this triplex that looks like a good deal (for a rental property) but not really sure if I am overlooking anything. The asking price is 350,000 for a triplex with 3 units. 2 units have 2 bedrooms, and 1 unit has 3 bedrooms. Each of the 2 unit bedrooms is rented out for $1000 each and the 3 bd is rented for $1500 so producing a total of $3500. This meets the 1% which is good for Houston in my opinion, and also seems to meet the 50% rule.

It is not in the best area but it is really close to a couple of universities and 5 minutes from downtown so I think there is a lot of potentials for tenants. I have also checked and it is not in a flood zone.

One thing that stood out to me was that the house is appraised by the County Tax office at $406K buy it's selling for $350K. Should this raise any red flags?

Please take a look at the analysis below and feel free to let me know anything that i might be overlooking or did wrong.

Thanks!

[Adam D Rinehart]

@Juan Abreu from what you have said and the numbers provided, this looks like many a 3rd Ward deal I've looked at. I'm not sure what value add you could do to the property to increase equity, but the current rents are a bit below the HUD FMR rate for 2 BR units. I have a 2/2 SFR and a 1/1 duplex in 5th Ward. The 1/1 fair market is $900 and the 2/2 is $1100. For context, I paid $100k for the duplex. And $87k for the SFR so $350k for a triplex is high unless you're in an area like Cody mentioned.

Absolutely fight the HCAD value. You are likely “benefitting” from new townhouse/condos being built in the area under the assumption of appreciation by gentrification.