1st Investment MFH - Help with research- Deal Analysis

[Russ McKelvey]

[b]Hello BP. I have been nearly obsessive about reading this site and have begun to look for a deal. I have about 250K remianing in a VA Loan guarantee so have been looking for a 4plex in that price range with a unit large enough for me to owner occupy.

Found a 4plex that has been listed for 715 days at 250K. Upon inquiring, the agent said the owner has had it for ten years along woth several other 4plexes. They have sold all but this one and are looking to retire from property management. Said no offers have been made since listing. I asked if the owner was flexible, and he said he is unsure because there have been no offers but whenever he discusses dropping the price owner says he is good waiting on an offer because of the good cash flow.

In my research, this property is paid off, has a 1 year old roof, and 3 of 4 units have 1 year old furnaces. Also looks like he is underpriced on rents as after comparing to 20 other listings average rent/SF in similar area would make these units rent about 50-75$ higher each. All units were 6 months and now month to month.

Here are the numbers I came up with have not yet recieved Schedule E or Rent Roll:

Potential Income : 26,400 - (8% vacancy 2112) = 24288 (using current rents)

Expenses: Tax 1309 (verified at asessor), Insurance 1819 (today's quote), Water 2880, Trash 1200, Lawn and Grounds 500, Repairs/Maintenance (assumed 10%) TOTAL: 9148

NOI: 15140

If I use VA the loan will cost me 1% for VA funding fee, and about 3K to close so I will assume 10 K to be safe.

If he will take 220000 for it, loan will cost me 12,449/year leaving 2,691 in cash flow.

CoC Yield: 2691/8000 =34% CAP Rate: 7%

What else do I need to consider? What questions should I be asking the seller before going to look through? Are my vacancy and maintenance estimates too low, too high?

Additional Info: Insurance high due to recent Colorado Wildfires, USAA stated replacement value at 425,000.

Property is in great location, but on a 3 lane road, which kind of sucks. 4016 SQFT.

Bottom Line: What would you offer for this property? Thank you.