Help analyze my first MF! Please

[Diem Tran]

Today I looked at a 6 unit property.  I like it alot but who cares what I think or like, especially if I never purchased a mutlifamily property before.  I learned that the numbers matter the most.  Please give me your opinion. The following is what the RE agent gave me:

* 6 units total.  1 two bd, 4 one bd, and 1 studio.  Building size total is 2940 SF, although there are four different buildings on 21,000 sf lot.  Since there are four buildings on the lot and ample room, the RE agent suggested that new owner could add fences, thus the individual units or buildings would each have their own back yard.  It becomes an amenity and therefore rents could be raised a little bit.  

* built in 1953,  from what i can see from the outside, the roofs are pretty ratchet and needs major repair, if not complete replacement.  My guess new roofs would be 18K????

* property is in  zone, in my opinion.

* actual rent is $4300 per month, 51,600 annual.  Seller says a new owner could raise total rents by $150 per month.  

*expenses are the following per month

landscaping 100

water 100

mgmt fee 310

prop taxes 335

insurance 207

repairs 200

total is 1197 monthly, 14364 year

* NOI 37,236

* CAP rate at selling price of 420,000 is 8.87%

There is no electric bill and the property is on a septic tank.

The above numbers is supported  with management's monthly report to the owner.

If I'm to underwrite this, is the monthly repair amount too low in this case?  If so, what percentage should I use for a property built in 1953 and looks like there are some deferred maintenance.   Also I don't see a reserve for capital expenses. Should it be included in the expenses? 

Am I missing anything? or should I be aware of something not mentioned? 

Thank you in advance!!!!

[Jeremy Tillotson]

@Diem Tran I want to bring my advice to this and explain my thoughts. First this is SOO over priced and typical in many cases. They are marketing a cap rate that doesnt include real numbers and compresses it further, with interest rates going to rise, I see negative cash flow in the future. First four new roofs for 18k, I haven't seen but if it needs anything more than shingles it is not likely.  Water seems low for 6 units (I paid more for my duplexes), most management fees run around 10% not 7% and theres nothing in there about vacancy. The repairs is way off (I budget $50 per month per unit for maintenance) Its rough but it works for me. (Mine is way lower than this but we gut our holdings and rehab them). He was prob doing the work himself. I see no money for legal or anything either so it seems to be omitting the business side of operating expenses. Using the 50% rule a 8.87 cap would be 290,868. This is just my thought but maintenance being low usually means lots of deferred maintenance, proceed with caution.