Is my realtor right or am I? Analysis critique!

[Wendy Carpenter]

I want to make sure that I’m not missing out on something/a good buy. I’ve looked at it 10 ways, and I can’t see where I’m missing anything.

My realtor sent me a canceled listing and told me that the owners had wanted 300k for it, but now would take 250k for it because they are wanting to invest in something else. She told me that the numbers now made it an 8.6 cap rate. I ran the numbers on my own and I got wildly different calculations.

4 units are 2bd/1bth and rent for $550
1 unit is 3 bd/2bth and rents for $675

Total rents of $2875

Owner pays some utilities at a cost of $8,800/ year

Here's what I got running it with the BP Rental Calculator (as self-managed):

-Purchase price of $250,000 (I did estimate of $300k ARV price)

-25% down: $62,500

-Amount financed: $187,500

-4.5% interest: P&I of $1,042.19

-Capex: 7%: $201.25/mo

-Maintenance/repairs: 7%: $201.25/mo

-Vacancy 5%: $143.75/mo

-Property taxes: $191.67/mo

-Utilities: about $733.33 mo

-Insurance: $220/mo

NOI of $14,209

Income $2,875.00 - total monthly expenses (including debt service) $2,733.10 = $141.90/mo cash flow and 2.64% COC with a purchase cap rate of 5.68%.

I told her I must be missing something, and she asked if I "had the NOI at $21,662?" So, as far as I can tell, she is only doing her calculations by the straight "expenses" of taxes, insurance, and utilities, and not accounting for any kind of vacancy, cap ex, or maintenance. I think that's the only way she got a cap rate of 8.6. I put the cap ex and maintenance at 7% due to the age of the building (1955). Keep in mind, this area is definitely for cash flow and not for appreciation, it's quite stagnant.

Is is just me or is the price of 250k on this definitely NOT a deal? I think she’s also wanting me to look at the potential rent increases (they are all below market), but everything I read says to only buy on actuals, never on possible projected numbers!

I told her that I would maybe offer them 200k (and that would still be only an “ok” deal) and her response was a prompt “they wont take 200k.” So I told her “that’s fine, we’ll just have to keep looking!” I don’t think she appreciated my polite challenge of her analysis. I’m also suspecting that she represents the seller of this property as well, and was wanting to sell this to me so she could sell them something bigger....