13 Unit Opportunity 1 block from the beach

[Brandon Singer]

This will be my first multifamily investment. I am looking to be a buy & hold investor. I am in negotiations with the owner of a 13 unit apartment 1 block from the beach. The purchase price is $750k.

Gross Annual Rent is: $91,800

Expenses include: 

Property Taxes	$6,300
Property Insurance	$6,000
Water / Sewer / Trash	$7,200
Advertising	$0
Live in Manager Free Rent	$8,400
5% Repairs / Reserves	$4,590
5% Vacancy	$4,590
Total	$37,080

As you can see above, there is a live-in manage who takes care of everything from painting, re-tenanting, collecting rent, etc. The current owner has owned it for 12 years. 75% of the A/C units have been replaced in the last 3 years. New roof in 2013. 

I am in the process of getting financing from my credit union for $600k for 20yrs @ 4%.  I will fund the rest as a 20% down payment. 

Most of the tenants have been in place for 2+ years so there is very little vacancy even though I have accounted for it. 

What do you guys think about this? What am I missing?

What would you differently? 

[Amber Gonion]

I like your numbers. You have accounted for a reasonable fee for management in case you need/want an outside manager later, you are at about 40% of rents for expenses which is realistic I like to see between 40-50%. The price is about right with a little room for negotiation.
I would count on 5% more expenses and if you still like the deal you should be good. Talk to a pm in the area to be sure there are no surprises coming up in the area.

I would do this deal all day after having a full inspection. It's good but not too good to be true.