To Buy or Not Buy? That is the Question

[Ayodeji Kuponiyi]

I found a nice 5 unit property that is cash flowing negative with 1 unit vacant. Pros: Place to live, great neighborhood, good schools if you have kids, close to hospitals,  property potential for profit, new roof, 3/5 units renovated, under market rent, tax benefits, and possibly best use of my money.

If the units were rented on market level, it would cash flow positively, especially if
I decreased expenses like installing energy efficient toilets and light bulbs in common areas. 

So I ask you BP Nation, should I buy or keep searching?

[Ayodeji Kuponiyi]

@Austin Youmans @Dan Mackin

Current Rent Roll

Unit 1 $800   Unit 2 $940   Unit 3 $850    Unit 4 $850     Unit 5 Office Vacant    Garage $100

Total $3,540/month $42,480/year

Market Rent

Unit 1 $980  Unit 2 $980   Unit 3 $940  Unit 4 $940  Unit 5 $1500  Garage $150

Total $5,490/month $65,880/year

Expenses

Property Tax $10,614/year   Insurance 2,687/year   Utilities $1,680/year  Maintenance $285

They seller didn't account for : PM 10%-11%  and Cap Ex 5%

Cap Rate is 8% and according to agent can be changed to 10%+ if all units were leased at $940.