Property Analysis 4 Unit in Eastern New England

[Sean Carney]

My property manager I use for a rental property that currently own has been helping me locate additional properties to purchase. I live out of state so everything I am looking at would be managed by him as well. Recently he suggested that I buy a 4 flex that his father owns (also real estate investor) and is looking to sell to use the money for a large development that they are building. I trust the property manager as we have worked together for the last 5 years with the one property I have. Either way I'd like to hear some feedback from the Bigger Pockets Community on whether or not this is something I should pursue. The numbers are as follows: 

4 Unit Property

Purchase Price of $300k

Property is currently fully leased and my property manager has shared all his prior rental history as well as all income/expense statements. 

Monthly Income: 

Unit 1 - $885

Unit 2 - $1050

Unit 3 - $750 

Unit 4 - $1195 

Total Rents - $3880

Assume 8.3% Vacancy (property Manger indicates it has run at 3.5% since they have owned it)

Monthly Net Rental Income less Vacancy - $3,556

Monthly Expenses: 

Property Management - $442

Property Taxes: $363

Maintenance @8% Monthly Rents - $279

Capital Reserves @8% Monthly Rents - $279

Insurance - $184 

Utilities (only during vacancy) - $45

Monthly P/I (20 year amortization w/ 20% down) - $1584

Total Monthly Expenses - $3176

TOTAL MONTHLY CASH FLOW - $380

Total Annual Return - $4560

Cash on Cash Return (60k Down) = 7.6% 

I know that 7% is not a huge rate of return for the amount of money I am putting into it. However, if you take a more aggressive look at vacancies and the capital reserves it changes to a much more enticing return. For the purposes of this analysis I am taking a conservative approach to the numbers. The majority of my money is currently in index funds, but given the success of the stock market over the past 8 years, I feel like it is a good time to try to diversify into some additional real estate holdings. Please let me know your thoughts.