10-unit building deal

[Nick Janovich]

Alright, so here goes. My maiden post on BP! I've been interested in real estate investing for some time now but have been focused on my primary residence. I purchased it in 2011 for $115k from a bankruptcy. It was built in the 1980s and the structure was good, it just needed some TLC inside and out. I renovated it for $30k. Total investment $145k. It is worth about $175k. I have about $90k in equity in the property. Great, you say, but what does this have to do with a 10-unit deal?  Well...

I'd like to use the equity in my primary home to fund the down payment on an investment property. I've been looking for about 2 months. Mostly at duplexes and triplexes. I really haven't felt good about anything.

Today I looked at a 10-unit building. Asking price is $70,000 but negotiable. Super solid brick building. It has 2 studios and 8 1-bedroom apartments. All are furnished. About half are updated within 5 years. The other half are fine but could use some updates. New roof 3 years ago, new hot water tanks within 4 years, most windows replaced, gas lines just inspected, new boiler pump. There is also a storefront which could easily be made into two more apartments if the demand is there. Currently used for storage.

One efficiency rents for $200 and the tenant is the unofficial manager. He cleans the halls, shovels the walks, unlocks the trash bins, etc. Been there for 42 years.

The second efficiency rents for $300. The rest of the one bedrooms rent for $450. Four of the eight are occupied. Two long-term tenants just died recently and they haven't filled due to wanting to renovate. They put one renovated unit on the market for $500 and had 10 responses in 24 hours but then had a death in the family so they took it off the market. The current owners have owned the building since 1965. They are retiring and moving south. As the husband told me, "I've made my money, time to enjoy it."

Here is my analysis of the deal. PLEASE look it over. I would pay all utilities. Gas is budgeted. Taxes, insurance, and utilities are figures from the current owners' books. I would initially manage the property so the cash flow would really be about $2,000 until I used a PM firm. 

I like the deal. I've seen 60% cash-on-cash with some duplexes but never anything in the 3-digit range. Thoughts?