hi benaiah,
based on what you shared, i'd stay away from both of these.
first red flag! the numbers don't add up. e.g., when i multiply the monthly gross x 12, in both cases its less then your stated annual gross.
with expenses, the suggested 50% rule is a good rule of thumb. depends on your taxes, maintenance, turn-overs, etc. my Hawaii properties run at 40% with property management BUT, HI also has the lowest tax rates in the union. i owned in dallas and had a 55% expense ratio.
So you need to verify. never take the sellers current taxes/expenses for face value. e.g., they could be paying taxes on a very low appraised value. call the assessor to understand how much taxes would be. other expenses can and should be verified. you can get ave water bills, power, etc by calling the utility companies. they will usually give this out, at least they have for me when i've called.
i always include a mgt fee in the expenses whether or not i'm managing the building myself. you should too even if the seller does not.
debt service is a factor you should consider. for example, i currently have a 3.5% rate on my apt buildings, which adjusts every 3 years. i underwrite using the ceiling interest rate to ensure my cash flow is protected should rates go back up, and they will some day. ask a broker for a referral to a mortgage broker who works with banks on smaller commercial deals. you could talk to them to get estimates.
with insurance, i always call my agent to get a swag price on insurance. they turn this pretty quickly for me, usually same day.
my take on the buildings:
the 4plex is grossly over priced, IMHO. just based on the numbers, assuming a 30yr fixed @ 3.5%, the most i'd pay is 500k, based on the return i'd expect.
at 500k, with stated income/expenses, you'd be buying it at a 8.63% cap. you would need to understand the prevailing cap rates in your area to know if this is good or not. e.g., in san francisco, investors buy at a 2-4 cap, which i think is crazy, but ppl buy for appreciation and make it up on the back end on resell. in the SF east bay, you can pick up similar properties for 8-10 cap. you would need to do some homework to understand what the prevailing cap rate is. local brokers will share this with you.
for the larger property, with your given income/expenses, at 1.3 your paying 4.4 cap. unless this building is in san francisco, its grossly overpriced. i can appreciate that its renovated, but what you are buying is an income stream and the income doesn't support this high of a price unless you know you can significantly increase the rents.
also, underwrite using actuals vs proforma numbers. e.g., if its 20% vacant, thats what you should plug in. why should the seller get the upside if they aren't going to do the work of filling it up with good tenants.
i calculated gross annual income at 169,332 (vs your 200,333). the difference is 15% so i'm not sure if vacancy is included or not. you mentioned 20% vacancy ... so the numbers don't bridge. i'm skeptical.
adding up expenses, I get 103,652, putting you at a 61% expense ratio. i think this is high.
also, with commercial properties, the amortization period is almost always 25 years vs 30 years on <5 unit buildings. this has an impact on your monthly payment, so for >5 units, us 25 vs 30 years.
