Considering trading up into a 5+ unit property... thoughts on my numbers?

[Kimberly T.]

We currently own our home and a triplex in CA, and some fourplexes in other states.  I recently saw a 12 unit apartment building get listed in another state for sale for about the same amount our CA triplex is worth (I know, right?  CA prices are crazy).  We're planning on selling our CA triplex in the not too distant future, so I was pondering doing a reverse 1031 on this as I don't see us being able to sell our triplex before buying the 12 unit.

Current triplex info: worth around $725,000 or so, mortgage principal is about $340,000. We have about $135,000 cash into it (original down payment + closing costs + etc.). Net profit every month is around $750 after accounting for all vacancy/expenses/etc., so that's about a 6.5% ROI.

Here's the 12 unit info/estimates:

(11) 2-beds and (1) 3-bed, plus a storage garage that is rented out separately.  Consists of 2 one story buildings, a pool, some lawn, and some covered parking.

Asking price = $750,000

Current income = (11 x $585) + ($685) + ($300 for storage garage) + ($125 laundry) = $7545/month

Market income = (11 x $650) + ($750) + ($300 for storage garage) + ($125 laundry) = $8325/month

Insurance = $3000/yr = $250/month

Taxes = $5000/yr = $420/month

Water/sewer = $700/month

Trash = $120/month

Electric = $200/month

Landscaper = $220/month

Pool guy = $150/month

Maint + cap ex = $85/unit/month = $1020/month (I know most people don't lump those together, but it's just how I do it to run numbers, and this is what we allocate per unit at our other units in this area)

Above total expenses = $3080/month

If I go with the same vacancy (7%) and PM (6%... yes, our PM is giving us a deal) as for our other units in the area, that means current net income is $6600/month, and market net income would be $7275/month.

We have enough cash that we could put 25% down now to start the reverse 1031, but I want to look at this longer term to see what our final numbers would be. Now, let's say we sold our triplex for $725,000; accounting for realtor costs/etc., let's say we end up with $670,000 (with $330,000 of that being cash and the rest paying off the mortgage).  So we'd have $330k to put into the 12 unit, so loan amount would be $420k (assuming we paid full price).  If we could get a commercial loan amortized at 20 yrs, I'm thinking our payment would be around $2850/month.

So expenses + mortgage would be 3080 + 2850 = $5930/month.  So...

Current rent profit = 6600 - 5930 = $670/month = $8040/yr

Current rent ROI = 8040/(135k + another 12k for closing costs & 1031 expenses) = 5.5%

Market rent profit = 7275 - 5930 = $1345/month = $16,140/yr

Market rent ROI = 16,140/(135k + 12k) = 11.0%

Not crazy about the numbers because we don't know what the interiors look like yet or how much effort/$$$ it will take to get the units up to a condition to be rented at market rate, but it's something we're pondering.  Thoughts?