38 Unit Purchase. $105k cash flow. Good deal?

[Andrew Michaud]

I am looking at purchasing a 38 unit apartment complex in Maine. Our area is a bit cheaper market than other places in the US. The property is in an excellent location. Right in town and walking distance to hospitals, schools, municipalities. Buildings are also in excellent shape, very well maintained, but all will need roof replacements.

Here are the metrics of the property.

Asking Price $1,330,000 ($35k/unit)

Total Income - $319,500

Taxes - $31,260

Insurance - $14,760

Maintainece - $12,000

Electricity - $20,032

Heat - $22,956

Trash - $2,400

Lawn - $7,200

Snow - $12,000

Water/Sewer - $1,416

Management - Self

Total Expenses - $126,528

Net Income - $192,972

Debt Services - $89,640 with 20% Down, 5.75% Interest, 15YR/20 Amortized 

Total Cash Flow - $103,000

DSCR - 2.51

Is this a good purchase?

Also, I am purchasing for 35,000 per unit, but Estimate appraisal will come closer to $43,000/unit.

[Mike Dymski]

If the vacancy rate is reasonable, this may be a good one.  If the property is worth $10k more per unit, worst case is you simply flip it for a $380k profit (minus selling costs and taxes).

Maintenance is too low...need to 2-3x that figure (which will include unit turns).

Include a vacancy amount in net income and cash flow...and include cap ex reserves in cash flow...and property management fees even if self managing (may have to use 3rd party management at some point and, even if not, you need to get 'paid' for self management, which is different than investment income).

Ensure that the area is fine.  $700 per month rent in some areas can be quiet and stable and a war zone in other areas.