Analyzing a multifamily deal...does this make sense?

[Christopher Pride]

Multifamily with a house and 11 rentals.  House is VERY old but well built.  Would need some cosmetic (paint, refinish floors, minor repairs/upgrades completed by me). It has been on the market for over 100 days.  Realtor says another deal fell through because it didn't fit their needs for an event location.

We'd be coming in with 20% and look at about $10k in initial improvements.  This would obviously be contingent on a thorough inspection.

Asking price: 1075000

Annual Rent: 139k

Vacancy reported: 5%

Insurance: 5900

Maintenance: 10k

Taxes: 4k

Utilities: 15,600

_____________________________

Total Expense: 35500

working on financing this week but I understand I'd be at around 6.5%

My biggest concern is DOM and major repairs needed. Rents can be increased. CAP from my calculation is +10% so naturally I am going to scrutinize. It almost seems...well...too good to be true hence the ask "does this make sense"

Any thoughts or your take on the deal would be so awesome.  You guys rock!

[Christopher Pride]

Quote from @Gino Barbaro:

@Christopher Pride

What is the median income of the area, so you figure where rents can go. What are you looking to do with the deal? Buy and hold long term or flip? 

What is the unit mix and size of units? Are they separately metered for utilities, or can you bill back to residents?

I think expenses may be a bit light, especially 10k for initial improvements. Banks gonna want you to plug in a management fee. 

Median income is 51,500. Worthy noting it's close to light industrial and downtown commercial, albeit a small town.

We will likely buy and hold until I can do a refi and add to the portfolio.

Its the main house large 3br, 2, 2br and 9 1br. No separate meters so there's a fee added to the rent for all utilities.

Improvements are minor to have it rent ready. Mainly some paint and floor refinish. I intend on doing a cosmetic remodel prior to selling down the road but it's not ready for that. I can rent it with some lipstick improvements.

You're right about the mgmt fee. I will be managing it but I still should pay myself something.