4-Plex in High Bridge South Bronx

[CJ Chen]

I am in negotiations on a 4-Plex in south Bronx. The buyer wants $460K

Do the numbers work and does anyone know about this area? And anything else I should worry about? I have done a lot of research online and walked the area but have never lived there....

PP: $460K (including all the closing costs, transfer taxes, etc...prob $500K)
Gross income $63K (fully occupied - two tenants month to month, 1 on 1 year lease, 1 on 20 mo lease)
Expenses are declared to be $16K ex property mgmt (so $1400 for water and sewer, $1650 for insurance, $4744 for property tax, $2K for maintenance, and $5500 for heat, electricity is paid by tenant)

I work 35 min away by train, so I can manage if necessary (though prefer not to). One of the tenants is currently paid $100 a month to collect the rent and to call maintenance when necessary. Also, the building was recently gut renovated in 2011 so in pretty good condition. supposedly the tenants have not been late in the last 2 yrs and they will give me proof of all expenses during diligence.

One concern is that properties in this area were trading 50% lower in 2011 (whoa!) and these guys bought it out of foreclosure for $165K in 2011 - although they did a gut renovation and resisted.

I have read the police reports, the city planning docs, and overall, to the untrained eye - this is a C/D area moving to a B/C area. Given the gentrification of many areas close to NYC (parts of brooklyn, queens, jersey, harlem) - this is part cash flow play and part appreciation. plus it's hard to find anything within 30 min of NYC at $125K a unit. Maybe I just haven't done enough research...suggestions welcome