Advice on 12 Unit Apartment Building

[Devin Chaulk]

I'm looking at a 12 unit property and I'm trying to figure out how to evaluate this deal. Most of the time, I'm looking at 2-4 unit properties, and it's pretty simple to evaluate. However, this is slightly more complex, and I'm finding it difficult to figure it out. I'm sure there are quite a few people here who could easily help me think this through, so here it is.

List Price: $179k

Gross Rent: $4,435 (1 vacancy, and 1 unit renting at $150/month by live-in maintenance guy)

Property Taxes: $4,384/year ($365/month)

Insurance: $4,100 ($341/month)

Tenants pay electrical, but Owner pays: Water/Sewer ($380/month), Gas ($230/month), Electric Com ($800/month). (What is Electric Com? Is that electricity in common areas like hallways, laundry, etc...?)

It's not in a bad part of town, and the place looks like it's in decent shape. 10 units are 2 beds/1 bath, 2 units are 1 bed/1 bath.

On the face of it, the price seems good for 12 units, but when I start to run the numbers, they don't turn out so hot. If I am able to get a commercial loan for 80% of the purchase price at 5% over 20 years, my debt repayment will be $945/month. Add in the above costs and I have $3,061/month without any management/maintenance/cap ex/vacancy costs. I would manage the property myself (but would like to figure the deal based on the cost of hiring a management company.

Here are my questions:

1. The way the property now sits, is this a deal? Why or why not? At what price-point would this make more sense? (Obviously, the lower the price, the better this deal becomes, but reasonably speaking, what price-point would you be interested in this deal personally?)

2. What changes could I make to make this a more profitable deal over the next couple years? Shift water/sewage and gas costs to the tenants? (Is this difficult/costly to do?) Make laundry paid? (Currently free in the basement).

3. What is the best way to finance a deal like this? I would not be planning on making improvements, so hard money (BRRRR) is out. If I absolutely HAD to come up with 20-30% of the purchase price, I could, but only if this turned out to be a really great deal, worth tying up all that cash.

Thanks for any insight you might have. I have a lot to learn, but I'm eager. Be gentle. Thanks.