Good Deal or not a good deal?

Houston, Texas
Multi-Family and Apartment Investing
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Good Deal or not a good deal?

Bryan Nwokem
Member since 2023 · 10 posts · 19 votes

I recently made an offer of $425,000 + 8,000 Towards closing + cost of title with 5% down on a brand-new duplex that will not be completed until October 2024. This is a 3 bed/3.5 bath 2600sf (1300 sf per unit) home. Since it will not be completed soon, the rate is not locked but as of now my realtor, who is also a lender is offering 5.99% as of today. This home is about 12 minutes away from downtown Houston, UH, Toyota Center, and several plants. This will be one of the 37 other duplexes in the gated community that will be built. The area is pretty old as most homes were built in the 1970s BUT they seem to be well-kept and have an HOA. The Average comps is $1700 According to the rent calculator on bigger pockets. Please keep these for homes of which NONE was built after 1980. I plan on living in one unit and I think that I might be able to rate the second unit for somewhere around $2,000. Maybe even a bit more. What do you all think about this deal? Please advise as I am not some real estate guru and know I have so much to learn. Thanks

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  • Carla Gordon
    Real Estate Agent · Houston, TX · Member since 2016 · 63 posts · 27 votes
    2y

    Hi Bryan! It depends on your goals. You likely won't be able to cover all of your mortgage PITI with the rent payments that you'll receive from one half of the duplex. You can however significantly decrease you monthly living payment if that's the goal. You'll also likely build equity over time as long as the property appreciates.

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  • Bryan Nwokem
    OP
    Member since 2023 · 10 posts · 19 votes
    2y
    Quote from @Carla Gordon:

    Hi Bryan! It depends on your goals. You likely won't be able to cover all of your mortgage PITI with the rent payments that you'll receive from one half of the duplex. You can however significantly decrease you monthly living payment if that's the goal. You'll also likely build equity over time as long as the property appreciates.


     Offcourse, the "Goal" would to be able to purchase something reasonable and after living there for a year or so, leave and have it cash flow. 

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  • Carla Gordon
    Real Estate Agent · Houston, TX · Member since 2016 · 63 posts · 27 votes
    2y
    Quote from @Bryan Nwokem:
    Quote from @Carla Gordon:

    Hi Bryan! It depends on your goals. You likely won't be able to cover all of your mortgage PITI with the rent payments that you'll receive from one half of the duplex. You can however significantly decrease you monthly living payment if that's the goal. You'll also likely build equity over time as long as the property appreciates.


     Offcourse, the "Goal" would to be able to purchase something reasonable and after living there for a year or so, leave and have it cash flow. 

    Got it, the rents in a year will likely remain around the same (but slightly higher if you're lucky!). Assuming that each unit will rent for approx $2000 each, that'll give you $4000 monthly. You'll want to take into account your mortgage payment (PITI) and a percentage for reserves (for capex and vacancy) to determine what will be left as your monthly cashflow

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  • Bill B.
    Investor · Las Vegas, NV · Member since 2013 · 8k+ posts · 10k+ votes
    2y

    If you check recent BP podcasts I swear there was a podcast guest that was building duplexes in Houston within the last week.  Something about weird zoning making fourplexes commercial zoning. But he was also doing some pairs of duplexes on the same lot. 

    I’d listen to it a couple times if I planned to do the same thing. Maybe reach out to them. 

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