First Multifamily Deal

[Kevin Rowghani]

Hi All

I have a multi unit under agreement and this is my first multi-unit. I have experience in Single Family homes and rehabs. I would like to get your analysis of the terms currently under agreement. 

Specifics (delaware county PA)

Row home constructed with brick and has a flat roof (both above avg condition) New windows with capping, hardwood flooring in good condition, wired smoke detectors, old water heaters and two old furnaces. Updated electrical panels. No AC. No washer and dryer but laundromat walking distance.

Split out electric, gas and water meters (tenant pays)

Strong tenant history, near major highways, public transportation etc.

2-2 Bed Room, 1-1 Bed Room, 1 garage also rented for a total monthly rent of $2455 or $29,460/yr

Taxes ($6,000) per yr

Insurance ($1200) per yr

Vacancy 8% per yr ($2356)

Maintenance ($1800) per yr

Other expenses ($500) per yr

Purchase price $180k at a 9.81% Cap rate

25% down using a Self Directed Roth IRA

$135k Seller financing for 180 months at 4.5% ($1032.74/month) non-recourse, no pre-payment penalty

Settlement is on Jan 30th 2015

Feb 2015 rent is buyers

First payment to seller is due March 1, 2015 

Inspection resulted in some minor issues which I need to submit my request of repair/credit

Would you proceed, kill the deal or re-negotiate the price?

Am I missing any other factors or are my maintenance and vacancy numbers not enough?

Any and all responses are welcome.

Kevin