Should I get this four-plex? First deal

[Roy Patel]

I'm looking at a Four-plex in a small college town in the midwest where I went to college.The property is owned by a family friend who is in his 70's and is considering selling, so it is off-market. We have not yet discussed a selling price. I have been inside the property a few years ago but I have not toured it recently. It was built in the 1970's.

Below are real numbers from the property manager which are an average of 2014, 2015, and 2016:

Gross Rental Income: $20,800/year

Property tax: $1,700
Insurance: $725
Management: $2080
Repairs: $5,750
Utilities: $1,700
Misc: $150
Total expenses: $12,105

Net Operating Income: $8,695


2015 was more expensive due to HVAC replacement and also new appliances. 2014 and 2016 were both ~$10,800 NOI. The roof was last replaced in 2006 for $4,500. Vacancy is low, and all units are currently rented at a reasonable market rate. This is all the data I have.

Based on comparable properties in the area, an equivalent duplex in the subdivision sold this year for $90k, and an equivalent 8-plex nearby is for-sale asking $230k. I know the area and this unit is 2 miles from the university, perfect for more senior students/grad students who tend to be the renters (fortunately not a party school).

1) For price, I am thinking of an upper cutoff of $130k, which would be a cash-on-cash return of 9% and a cashflow of $3k/year. Obviously lower is better. This is assuming a 25% down payment on a 4% 30-year mortgage. Does this sound reasonable, or should I lower the price threshold to get a higher cash-on-cash return?  

2) This property is exceeding the 50% rule, which is a little disconcerting. Would this raise flags for you?

3) Any suggestions for purchasing a property from a friend/acquaintance? I do not want to use a realtor; I prefer to keep overhead fees to a minimum for all parties. I still want to get an inspection to make sure everything is in good shape.

Thank you!!