4-plex in Fort Worth, TX

[Nick B.]

Hello All,

I am considering buying a 4-plex in Lake Worth area of Fort Worth, TX and I'd like to get your opinions on this deal. Here are the details:

• Low-low middle class neighborhood; although houses look more or less neat and overall feel of the area is positive
• Subject property is in the cluster of other 4-plexes; the rest of the area is SFRs
• All 4 units are 2bdr/1bath, 800 sqf.
• Built in 1985.
• 2013 NOI was $12600 but this number excludes one time charges (appx. $3000) and does not include taxes and insurance. If I subtract taxes and insurance, NOI goes down to $7000.
• Rents are $622.5/mo (avg) with total scheduled gross rent being $2490/mo or $29880/year
• Two tenants have outstanding balances of ~$150 each. Late fees?
• Only half of the property taxes for 2013 are paid by the owner. The other half is still due. I noticed that the owner paid in 6 month installments in the previous years as well. Big deal or not?
• The owner is out of state and originally bought the property in 2005 while still being out of state. He may have never visited the area.
• Asking price is $200,000.
• The building was previously listed for $160K in 2010 and then removed from the market. Then it was listed again in Feb of 2014 for $200K and removed a month later. Is this a sign that the asking price is too high?

If I value this property using 10% CAP rate, the price I come up with is $70K based on last year's NOI. I don't know if the building need immediate repairs or has deferred maintenance. If it does I would subtract these costs from my offer.

Is $70K a good price for this building based on the information provided or am I way off? $200K is definitely way too high but what is the "right" number?

I will ask the seller's agent about deferred maintenance and Schedule 'E' for the last 3 years. Is there anything else I need to ask for?

Thanks
Nick