In fact, sometimes local market conditions mandate looking elsewhere.

@Will PritchettAh yes, I had just read that part of the book where he details that the bank will sometimes not loan because of the condition of the property.I guess an unanswered part of my question that may have not been clear is, what if I go to refinance after I buy with the FHA, but do not have enough equity to leave in the deal unless I shell out more money.

You may have trouble finding a hard money lender willing to lend under those conditions.

You need an actual budget based on condition, guesstimates are usually fine, as long as you have a list of itmes they will average out. 

I finally found one that looks good to me based on both the numbers (rents just about meet the 1% rule) and the property itself.Details: 3 units with 3 bds/1ba perSale Price: ~350kCurrent Rents: 1100 per (avg: 1446 for the area and median: 1350)Property Managers: 7-10%Property Condition (1-5): 4The place cash flows with the current rates and could obviously do much better with higher rents.Anything else I should consider? 

The condition of his unit is in bad shape & needs lots of repairs.

@Larry Turner at the duplex level, your concerns are primarily the same as single family, plus add historic financial statements.Beyond building condition, I would make sure you know market rents, and what quality of finishes are required to achieve this. 

Just don't expect it to perform as well as your calculator says.One more piece of advice...if you are investing in C- / D areas and you install air conditioning, make sure you chain the condenser down.

I guarantee there will be much more wrong that you don’t see.I personally wouldn’t offer on a house I couldn’t walk and feel comfortable if it’s condition.

@Jonathan Oh The seller changes new facilities so maybe it is in a good condition, or not.