Questions regarding small apt building analysis

[Avi Garg]

Looking at a small apt building of 24 units as a buy and hold listed at $695,000. It was renovated last year so not much room for value-add. Rents are on the higher side as well. Roof and HVAC reserves have been accommodated in the proforma analysis based on the remaining life. Proforma CAP is 14% and Current CAP is 12%

Few questions:

1. Currently 4 units are vacant. Do I used the potential income for these units in my analysis? I think I should but wanted to get feedback.

2. Expenses are on the lower side (including the reserves for the roof and hvac) at 34%. With potential gross revenue of $147424, the NOI is $97300, it looks like a good deal. If you would have to send in an offer, what would it be? Would you base it on 50% expenses?

3. With 50% expenses and 14% CAP, the offer price would be ~$526,500 and 12% CAP the offer would be $614,300. Which is a better offer? I am trying to send a reasonable offer than an unintelligent one.

Any help is appreciated.

PS: Some numbers are random to keep anonymity of this property