Seems like a deal, right? Need a nudge

[Kelly Farley]

I am new to multi-family investing.  Since finding Bigger Pockets earlier this year, I've been focused on learning more about analyzing property.  I started out with looking at single family but after listening to the podcasts and reading more, I decided I needed to enter the game at a higher level in order to get where I want to be.  My W-2 job is engineering and I own a small real estate brokerage that focuses on residential.  Commercial is very new to me.

I was having breakfast with a friend of mine recently and I was telling him about my interest in multi-family and asked if he knew much about them, he didn't.  However, he did have a client recently pass away and his 70 something widow was looking to sell two 9 unit buildings (without a broker) that they have owned since they were built in 1984.  He asked if I want him to ask about them.

Long story short, I have had a meeting with the current owner and her two sons.  She prefers to be completely out of the apartments, but is warm to the idea of owner financing.  I have ran these building several different ways and have settled in on making two offers.

Basics:

Scheduled Rent:  $151,600

Garage Income:  $1,800

Laundry:  $3,600

Effective Gross Income (assuming 10% vacancy):  $141,840

Taxes:  $20,800

Insurance:  $8,000

Electric:  $1,436

Water/Sewer: $6,073

Gas:  $600

Trash:  $2,700

Lawn/Snow Removal:  $3,360

Capex/Maintenance (15%): $21,300 (Probably high since most of capex items are less than 7 years old)

Total Expenses:  $64,300

Net Operating Income:  $77,540

Am I missing any other expenses else besides PI payment?

Asking price is around $1million.  Without broker fee and some negotiations, I hope to settle with one of these two offers:

Offer 1:

$950,000

Owner Financing:  10% down, 5% interest, 30 year amortization and 5 year balloon.

Year PI:  $55,080

Income:  $22,460

Offer 2:

$900,000

Bank Financing:  25% down, 5% interest, 25 year amortization.

Yearly PI:  $47,352

Income:  $30,200

Strong job and rent market.  Occupancy can be reduced to 5% with some cosmetic improvements to freshen up the apartments.  I plan on reinvesting the capex budget of $22.5k/year back into the units for the first 5 years.  Rents can be increased from the $700 average to $750 average based on product in the market.  The older couple that owns them hasn't done much true management to the buildings to keep them running like a business. 

I know I am new to this, but this seems like a good deal right?

A little nervous to make the big leap financially, but the time is right.  I lost a lot of confidence about 12 years ago due to losing two children and still working to get it back.  Any and all input/encouragement would be greatly appreciated.  Thanks.