Off market cap rate question

[Nicholas J.]

I’ve come across a off market 12 unit apartment, for sale by owner. Sale price 660K. Current rent is 575/unit= 6,900/ month. Local market supports 625/month. Expenses are approximately 1,700/month. My question when trying to accurately calculate cap rate, I assume all expenses are to be included like cap ex and property management? Their expenses don’t include those. Also, when calculating income, I assume you only use current rental income, not 100% occupancy if a unit is vacant and not what rents “could” be? I want to nail down a true number and not something inflated. A lot of numbers I see on this property and other buildings are what the potential could be versus what is reality right now. In my mind, it’s only worth what it currently generates today, minus deferred maintenance issues. Thanks for the help!