12Unit Apartment review

[Drew T.]

Hello,

 I currently own three single family rental properties, for the last 5 years. I've saved money and have been searching for additional properties to purchase in my area. I have a mutual friend looking to sell a 12 unit apartment complex, due to his age. I'm new to commercial type properties, so any help would be much appreciated. The property has been updated over the last 5 years: New cabinets, tub/showers, doors, paint, countertops, sinks, trim...etc. New 30 gal water heaters in each unit. New shingles in 2010. New commercial water softener for the whole building. New aluminum siding in 2005. Property was built in the mid 1970's.

12 units: 9 one bedrooms, 3 two bedrooms.

Gross rent: $6515 (room for gross rent to be moved up to $6600, due to 2 units having lower rent)

Additional income: $150/month for laundry machines on property

Taxes $7868

Ins  $5816

Only utilities paid by the current owner is water, which runs him about $300/month for the whole building. Garbage, which is $90/month. Hallway lights and entry way light electrical run $125/month. Lawn and snow run about $125/month.

Local cap rates are 6% up to 10% on properties of this type

Vacancy rates for the county on units of this type is 5%, over the past 10 years. (very small, about 3,000people, central US town on interstate, with a state college and city of approx 60,000 within 15mins and another liberal arts college and city of 15,000 within 10mins).

No management fee, as I'd take care of the property

Monthly repairs, I usually set this at 12% ($700-750)

Asking price $600,000

I've been approved for a loan at 5.09% (5/5arm, 30yr am., $1500 closing fees), given the option to put as little as 10% from a small community bank. The seller has given me the option for them to carry the down payment of up to 20% of the purchase price at 5.25%, am over 30years.

Each unit is currently rented on 1 year leases.

What else should I be thinking about before making a decision on this property? Thoughts on the quality of these investment numbers?

Appreciate the help!