16 Unit Apt Bldg decision is biggest in my life!! HELP PLZ

[Glenn Hanzelin]

I am looking to purchase a 16 Unit Apt Bldg. at a price of $360,000. The property is decent condition but has the usual BS deferred maintence from the owner not keeping it up to date and making improvements. I estimate these Improvements needed at $35,000. Probably about $20,000 light, but I am willing to take this risk. Things that are needed are HVAC upgrades, and a few cracked heat exchangers (not leaking CO2 yet) Carpets are trashed in 12 of the units, roaches, empty 40's, two pit bulls that need to go. Parking lot tilted toward building, place just needs some good loving.


INCOME

16 units @ $410 per month = $6,560
Laundry per month $250

Monthly Gross Income $6,810

Less Vacancy (estimate) 5% $328

Monthly Net Income $6,482


YEARLY INCOME $76,779




EXPENSES
Taxes 2009/10 $17,068
Insurance 2,604
Maintenance 3,887
Garbage 1,181
Water/Sewer 0
Gas/Electric 4,771
Snow removal/Lawn care 440
Management fee (5% estimate) 3,839
TOTAL $33,790
Expenses are as a percentage 44%

Net Yearly Income (before capital reserves) $42,989

Capital Reserve--4% (estimate) $3,071

NET YEARLY INCOME $39,918

288,350 Amount of New Mortgage

CASH DOWN 27%

106,650
6.50% Interest Rate 0.54%
240 Month's amortized

CAP RATE 11%



$2,149.86 Monthly Payment

Debt Coverage Ratio 1.55

$25,798.32 Yearly Mortgage Payments

Cash on Cash Return 13.2%

Yearly Cash Flow $14,120
Yearly Loan Reduction Year 1 $7,354
Total Benefit Year 1 $21,474



TOTAL RETURN 20%