Small Apartment complex deal

[Dan Miles]

Hi fellow BPers!

I'm interested in a multi-family property and need fresh eyes looking at it to decide if it is a good deal or not.  My only concern is cashflow is low at this point.  It's a 20 unit complex. With a 1200sqft. house on the property as well.  5 separate buildings of 4 units a piece.  12 2bd units (700sqft) and 8 1bd units (600sqft.).   Figuring 30% GI for expenses

List Price: $619,000

2016 Gross income: $84k

Expenses:  $25,200/yr

Insurance: $2350/yr

Tax: $8,000/yr

Debt service: $40042.56/yr

---------------------------------

Profit: $8407.44/yr.

This is a commercial loan with 20% down ($123,800) at 5.25% for 20yrs.

So $8407/yr.  doesn't sound like much for a 20 unit.  Vacancy is at 16%.  So there might be room there.  The management company says that the owners have not raised rents for a long time, but discourage doing it quickly as to nut run people out.  Looks like owner pays water also but I'm not positive.  There is room to grow seeming as there is no central a/c or heat.  They have window units and baseboard heat.  

So tell me what you think!!

Thanks!!

Dan Miles

[David Zheng]

84,000/20/12

means the average rent is only $350/unit/month. That is insanely low....what kind of neighborhood is this?