Multifamily UH/TSU Numbers

[Uche O.]

I would love to get some opinions about a property I have under contract. The property address is 2701 Isabella St. and has two duplexes on one lot.

https://www.redfin.com/TX/Hous...

It seems the agent listed the property according to only the square footage of the front building. However, HCAD lists the total square footage as 3,762 (2,178 sq/ft for the front and 1,584 sq/ft for the back) and lists the full square footage as "living area".

If I take all of the multifamily properties sold on that block within the last year, select only the renovated properties, then average them after dropping the highest and lowest - I get about $180/sq/ft. That would put the property at around $680k ARV.

Also, I'm thinking that the property would be able to get ~$1350 for rent if fixed up and renovated. The property is in pretty rough shape and would need lots of repair so before going down that path I want to see if my numbers check out.

Any thoughts?

[Luciano A.]

@Susan Tan

Correct that 3rd Ward and SC Houston has not reached the same gentrification as Montrose but that is the point. Buying in Montrose makes no cash flow right now unless you but large down payment. Montrose has already gone to major gentrification. I have bought in 3rd ward since 2010. The rents have more than doubled. The properties have appraised 3x more. I would not suggest anyone buy retail prices just because they have money. If you buy right and after rehab, you are able to create equity from the deal then you are better off than buying in Midtown at retail price.

I see you too are from CA. I moved out here back in 2008. So I have seen areas that changed since then. Montrose was not what it is now. The same thing goes for the Heights, EADO, etc. If you can catch a neighborhood right as it is gentrifying that is when you will see great values. Coming in at the tail end is not where you will get good values unless you buy a major fixer. As a builder, I don't get scared of fixers. 

I would not buy a property in the Third Ward, Montrose, Fifth Ward, EADO unless I can get a great price and after rehab still have equity in the deal. I don't rehab to have a property appraise at market value. I am not a non-profit lol. 

If you are suggesting someone who has money and they want to park in a property that is safe and will not likely lose value then I agree, some established areas like Midtown would be a good place but I think most people are wanting cashflow and appreciation. 

Just my thoughts, not looking to disrespect anyone and how they want to invest.

Best