Negotiating 58 unit deal - need some thoughts!!

[Nik S.]

Hello all, i currently own a 50 unit apt building so I have a good idea about the business however I can't seem to properly value my next deal. Here's the basic details : (mom & pop run) 58 unit, occupancy is 80%, NOI he is showing is $120k... he skipped a lot of expenses as well as having terrible accounting. The area is in between a C/C+ (blue collar tenant base/SSI/disability fixed income) Current deferred maintenance is, parking lot (original, needs repaved)$30k replacement job, 2 original boilers (replacement cost $13k x 2= $26k, windows are mostly all original, all need replaced eventually ($40k) & about 50% of the roof has been replaced. He's a very cheap investor to say the least... but hey he's got an asset on his hands! Most units are livable but the small kitchens / bathrooms need renovated upon turnover but still decent just dated. The rents are low and will need raised within time. The building was built in 1950's, so the age is there. The units are all 2 bedrooms and have a good layout and are of good size. I can get this building for $1.3-1.325m. I can't seem to justify paying what he wants for the building knowing the deferred maintenance... I can make decent cash flow (nothing great but obviously a value add deal to help increase value/cash flow) as is but the fact is it will need upgraded as its a bit run down. I'm going back and forth and can't seem to make up my mind. I offered lower however he refuses so we've been going back and forth, he won't budge. I think he's too confident as I came in fast and decently strong. The area that the building is in currently trends around a similar per unit price... current owner hasn't done much as far as improving the property as he bought it less than 20 years ago... essentially if and when I step in, I'll be forced to do the upgrades that are necessary and bear all the expenses. I'm looking for your expertise on your initial reaction to the deal.... thanks everyone!