Am I being too conservative in my analyses?

[Heather R.]

Hello,

I am currently evaluating a few markets, Indianapolis and Tacoma WA to purchase a small multi-family in the next few months. I live in Seattle so Tacoma has been on my radar due to its proximity. Appreciation in the Tacoma market will likely outpace Indianapolis and the properties are much more expensive. In Tacoma, competition has skyrocketed and everything is going for asking price or above. 

I went to look at a fourplex yesterday in a good area, the building needs some work but nothing major I can see. I have been running the numbers and it just doesn't make any sense to buy based on them - am I missing something? Am I being too conservative? Or is this truly not a good deal?

Building - 4-plex

1-bedrooms, 750ft

Laundry in basement (not coin op)

Storage in basement

Parking

Asking price: $389950

25% down: $97487.50

Amount financed: $292,462.50

At 4.5% interest rate, mortgage payment would be: $1481/mo

Current rents: $650/unit

Based on market, could potentially move to $750-800/unit with some updating

Using $750 (to be optimistic) - $3000/mo in income

Property management @10%: $300

Leasing fees: 1 mos rent: $3000/yr or $250/mo (if all the units needed to be leased during a year @ 1 mos rent per)

Capex reserve @10%: $300/mo

Maintenance/repairs @5%: 150/mo

Vacancy @5%: $150/mo

Property taxes: $452.83/mo

Electricity (for basement, laundry): estimating $100/mo

WSG (currently landlords responsibility): $320/mo (estimated based on Tacoma's pricing)

Insurance: $70/mo

Total monthly expenses: $2092.83

$3000 (income) - $1481 (mortgage) - $2092.83 (expenses) = -572.83/mo

Am I being too conservative in my numbers? There are things that could be done to reduce some of the expenses/increase income, like putting coin-op in and implementing RUBS. But I am also not considering the updating that would need to be done to the building which would be thousands.... I don't think I am going to move forward on this place unless I am just really screwing up some portion of this analysis. 

Any feedback is appreciated! Thank you!

Heather