What would you offer? 4unit. My first rental

[Matt Lindstrom]

I'm looking to take my first step into rei.  I have told everyone I know what I intend to do and  today my dad told me that a coworker of his wants to sell his 4 unit.  It is located in a nice area of Milwaukee.  I did a little research and he paid 315k in 2005.  He sent me an email stating the current assessed value at 234k and said make an offer. I am curious to here what some of you experienced investors have to say.  Here are some of the numbers I know.

Brick 4 unit

2 bed 1 bath units 

8 car off street parking

Appliances included

Newer water heaters and furnaces

$2700 gross monthly rent = 32400 per year

Minus 10% vacancy rate= 29160

Take 50% off for ballpark expenses = 14580

14580 @ 12% cap rate= $121500

Or 10% cap rate= $145800

I am figuring ballpark numbers to see if we would be in the same ballpark on price as to what I would be comfortable with.  He is looking for a cash sale or willing to do some seller financing which is helpful.  To me it seems that we would be off by quite a bit.  He claims to cash flow $700/month.  The only way I can figure that at the range I think he is looking to get is to not figure cap-ex, vacancy, property management, and normal maintenance.  Any input would be very helpful.  Thank you in advance.