How to recognize a good deal vs a bad deal?

[Claude Sicard]

Hi 

I'm trying to learn, read, and grow my network in real-estate for about 1 month. I'm fairly new to the whole concept of investing into an MFH, but I think I'm ready to look into my next investment. I definitely don't want to precipitate myself into any first deal, but I need to start somewhere. I currently talking to a broker about his 4units MFH on the market and here are the specs for this deal:

Rent Roll:4x $550      monthly returns:$2,200.00        yearly returns:$26,400.00 

Income & Expense 

INCOME

Rental Income $26,400.00 

Coin-op $1,200.00 

Vacancy/ Credit 

Allowance 5% $1,320.00 

Total Income $26,280.00 

EXPENSES (Best guess and ests totals 5% min $200) 

- Management $2,400.00 

- Utitlties: Water, Gas, Power $3,436.00 

- Maintenance $1,320.00 

- Insurance $2,000.00 

- Includes Trash Property Tax $2,826.00 

Total Expenses $11,982.00 

NET OPERATING INCOME $14,298.00 

RETURNS ANALYSIS

- Capitalization Rate 7.15% 

- Project Cost $199,900.00 

- Price Per SF $50.00 

- Debt Amount $159,920.00  

- Equity Required 20% $39,980.00 

Net Operating Income $14,298.00 

Debt Service $9,723.49

Net Cash Flow $4,574.51

Leveraged Return on Equity 11.44% $64,022 net worth accumulation 

Principal Payment - 1st Year $2,579.85 

Return on Equity after Principal Payment 17.89% $64,022.38

DSCR 1.4704591

Year 1 $7,154.36 

Year 2 $9,852.51 

Year 3 $12,674.51  

Year 4 $15,626.51  

Year 5 $18,714.51  

Debt Service Assumptions 

Interest Rate 4.50% 

Amortization 30 

LTV Ratio 80%

(Properties located in Wisconsin City Green Bay)  

Take for a fact: I don't know the surrounding economy of the city at the moment and the area of this property. It seems to be a good deal, but I'm wondering what are some of the questions I should ask? and what should I pay the most attention to this deal or future deals? 

He advises me to refinance the property after the 3 years and reinvest the money into another 4units to grow my real-estate? I have recently learned from the forum this part actually is a good advice by not trying to complete the mortgage because it would be considered as lost at a long run. (If I read correctly). 

Last point: He advised me to take a small HELOC or an HEL of $50000 on my SFH which already paid off.

Any pieces of advice or suggestions are more than welcome!