Are there any quick and dirty rules for assessing rental properties?

[Jeremy Hale]

I'm currently looking into buying my first duplex/triplex to try my hand in rental properties. I'm being overly cautious at this point as I don't want to walk into a nightmare of an experience. This is the first home that initially jumped out to me as a great investment, but the more I look at the numbers and see the expenses, I'm starting to wonder. It was initially pitched to me by my agent as a 'heavily cash-flowing property", but we quickly found out utilities were owner-paid, and the expenses have slowly added up to make it not as good as it first appeared.

House price: 171k

Taxes: $3,900

Utilities (paid by landlord, not separated): $8000/year

Gross rents: $31,600/year

With vacancy, maintenance, management company (still not sure if I want to try my hand at managing it myself at first), and insurance, I'm seeing a cash flow of around $225/mo. Multifamily units in this area aren't really hot sales and sit on the market for months at a time, so I'm not really expecting huge appreciation gains on the value of the home over the years.

This particular home has been on the market for 2 months now. The asking price seems fairly reasonable given other units in the area, but I foresee some expensive repairs in the future (both furnaces are dated, electrical is still on fuse boxes). The home overall looks well-maintained with a newer roof, siding, appliances, and renovated interior all <8 years. 

I looked over the numbers and decided the cash flow was a bit low given the anticipated updates I see coming. I told the listing agent this and she told me the seller wants to know what number I'd feel comfortable making an offer at.

My question is, is there any generic formula I should be using to see what a ballpark good price would be to make this a fair investment before I start trying to come up with a realistic offer? Part of me is inclined to offer 30-40k below what he is asking, namely because I see other duplxes/triplexes on the market that have slowly lowered their prices by that much, but I think an offer that far off what he's asking might be balked at.