What am I missing on this 11 unit deal? (Beginner)

[Jaime Ronderos]

I have already bought a duplex, realized mistakes I made, but luckily am on the mend with a slight positive cashflow.

Now I am looking for an apartment deal of $800k or less and have 20 to 25% downpayment with a lender setup for the loan.

Looking around Loopnet, Realtor and Crexi I have found the options are a few types: either large number of units - older in bad shape in a city (cap rate 9%), small number of units - older -that have been rehabbed in a city (cap 6%) or newer small complexes in smaller towns with cap rates all over the map.

I am looking at an 11 unit complex of 1970 vintage in a medium size town with a large state university in the town. Town seems very stable with industries other than the college.

Price $400,000

SqFt 6550 - (small apartments 325 - 800 sqft)

Appears well maintained.

Near park and center of residential areas.

Gross operating income (w vacancy and misc income) $79,300

NOI $38,500

So cap rate is 9.6%

Utilities were owner paid but transitioning to RUBS - I have an idea what that means but don’t really know.

Is the cap rate an indicator that this property will not appreciate over time well? That it is “risky”? What should I be asking? Or looking for?

I would appreciate your thoughts!