Asbury Park NJ Multi-Unit - Good Deal?

[Paul Camuto]

Hi, I have been going at the rental game for a while accumulating 15 individual units 1x1. I want to branch into a multi-family unit. It seems that all the multi-family units I look at have lower cap rates and lower cash flow amounts then I could find individually. Here are the #'s:

The broker says they want 8-9M for the 16 units. The total expenses with mortgage, insurance, maintenance, taxes, .etc are at $47K a month. I included the cost of the debt coverage for the down payment which I would have to pay interest on the line I would use for the funds. The current income the building is producing is at $44K. It is a negative cash flow on paper. The cap rate is at about 5.5%. They have a management expense listed at $1K a month which I could self manage. Even if I raised rents and all went well with no maintenance expense I would be breaking even at best.

Is this an appreciation play? It is tough to value if the $8M ask is comparable to anything else. How would you guys go about this?