First Investment Property Analysis California

[Tiffany Sy]

Hi BiggerPockets,

I'm a newbie in real estate investing. So far I've just read books and articles on the topic and played with the Bigger Pockets calculators. I want to buy and hold rental property for cash flow so that I can retire from my full time job. There is a Triplex in California that I'm looking at, and I was hoping that I could get some opinions on this property and whether I'm actually doing this right or not.

Unit 1 Rent $1100

Unit 2 Rent $855

Unit 3 Rent $850

Gross Rent $2805/month

Expenses

CapEx 10% = $280.5

   Vacancy 5% = $140.25

   Repair 5% = $140.25

   Water & Sewer = $80

   Property Taxes = $389

   Insurance = $100

   Garbage = $21

   Landscaping = $50

   Property Manager 10% = $280.5

Total Operating Expense = $1481.5

Principal and Interest = $1292 with 25% down

Total Expenses = $2773.5

Down Payment 25% = $86,250

Closing Cost = $10,600

Repairs = $2000

Cash Invested = $98,850

Cash Flow = $2805 - $2773.5 = $31.5

Cash on Cash Return = ($31.5*12)/$98,850 *100 = 0.38%

The only expenses that I'm certain of is the gross rent because the triplex is fully occupied and the principal and interest of $1292, which a lender quoted me. I just guessed the other expenses and have no idea what condition the property is in. But based on the pictures, the outside of the property looks ok. The neighborhood is decent, and I would say a B class neighborhood. I did read that it is very hard to find cashflow properties in California, but a return of 0.38% is incredibly small and worse than a high yield savings account. I analyzed other duplexes and triplexes in the same manner, and they were all cash flow negative except for this one. Is a super small cash flow like this normal for California investment properties and I should just jump on this deal because at least it's not cashflow negative? Is my analysis wrong? Are my expense guesstimates too conservative so all deals look bad? Or am I just looking at a bad deal? I'm hesitant to make an offer because based on the numbers the property looks like it's one rounding error away from being cash flow negative.

Any advice is appreciated.