Analysis questions - about to offer, help!

[Tracy Thurston]

Hi!  

I found a place that looks like it had great numbers and am about to put in an offer but am wavering..  2 issues that make the numbers iffy now.  Currently long term tenants (great) so rent is lower than market.  This obviously brings the cash flow down a bit.  But, the biggest issue is the roof will need replacing within 3-6ish years.  When doing analysis, where do you account for this?  I have typically been putting 10% for cap ex, but should I really bump that up to cover this larger expense? If so the numbers obv do not work.  Realizing the rents will be able to be higher in the next couple years.

Appreciate any insights here.. this is my first investment deal and it's getting real!