Putting a 15 unit deal together

[Michael H.]

I came across an off market 15 unit for sale and have a general idea of the condition of the property. I haven't seen all of the units yet as they're tenant occupied. 2 units are being remodeled and vacant. He said he has a 3% vacancy rate I asked the gentleman how he arrived at the selling cost of $750,000. He replied that he came up with the value based on that is the # that makes it a 10% cap rate. It is technically cash flowing well with about $3500 a month after P&I, vacancy, maintenance, insurance, management, taxes, and insurance. The issue I'm having is the gentleman has owned the property for 16 years and appears to have put very little time or money back into it. At a very rough guess I'd say it needs $40-50k and possibly more in various repairs like water heaters, general plumbing, hvac, paint, windows, etc. How does the fact he's banked cap ex for 16 years effect an expected cap rate /value? I'm not sure the rents could go up much higher for what they are either. There does seem to be some value add with an unfinished unit that could be completed, laundry possibilities, and storage units. Is there a good equation to use to calculate this to substantiate any offer? What am I missing? The units are in a b /b- residential area with no other apartments around. Thank you for any feedback you can help me with. Michael