Yet another request for deal analysis help......

[Patrick Hall]

Ok...as I struggle on...can anyone let me know what I am missing in the deal analysis below......I have been running these forever and possibly the props I am looking at are just not good deals but then again, I keep seeing someone buy them so there "has"(??) to be some upside that I am missing in my valuations:

Purchase price:  495,000
Units:                      16
Rental Income:      8,400/mo
Down:                    20%
Down:                    100,000
Closing:                      6,400
Repairs:                    16,000 (assume 1,000 per unit)

TOTAL INVEST:     122,400

Costs:

  Debt:                  2,800.00 (6%) 

  Taxes:                   690.00
  Insurance:            200.00
  Sewer:                   800.00
  Heat:                  1,200.00
  Yard:                       40.00
  Garbage:              300.00
  Cap Exp(3%)        252.00 (Lower than I normally go)
  Repairs (5%)        420.00 (300.00 per yr/unit)
  Mngmnt (10%)    840.00
  Vacancy(7%)        588.00
  Screening              40.00 (tenant screening)

TOTAL COST:     7,600.00 (rounded)
Monthly CF:          800.00 (yikes...…...50.00 per unit!!)
Annual CF:         9,600.00
ROI: 7.8% (rejected)

Keep in mind, this analysis is at 8-10% BELOW ASKING PRICE...………...At 300,000, (200,000 plus less than asking, it starts making around 10-11% but that price is just crazy versus asking.

So...in my mind, its a lot of work handling a MF building for 8%...a 401k averages 8 with little effort and little risk (well until now!!!)...…..Is my analysis incorrect? Does a prudent REI take into account earned equity as profit? Depreciation? Do they Includes Cap Exp/Repairs/Vacancy in profit? I wouldn't be frustrated but for the fact that someone will buy this unit and my assumption is...will make money. Am i seeing this wrong????

BTW...the CAP on it based on the above analysis/price is 12-13% which is about right for the area.

Help?   

Thanks in advance.