small 2 family rental deal analysis

[Henry Chan]

Hi folks, first time posting here, I am currently looking at a very affordable rental property, I have looked over the numbers but would love your feedback. I have this nagging feeling that I am being too optimistic on my numbers.

2 family unit, first floor is 1 bedroom 1 bath, has access to basement. 2nd floor is 2 bedroom [1 bedroom plus renovated attic], with small balcony in the back.

The whole house is ready to move in, the current owner did a great job, recently she lost her husband and lost heart in owning this house.

Asking price is $65,000.

This is a small town in PA, population had been stagnant in the last 10 years, only 2% growth. A mid to low income town of 28,000. The block is quite nice and quiet, short driving distance to downtown. Most single fam around here are going for 50 to 70K, but the sales prices in the last 10 years had been pretty similar.

Electric and water meter are separated [paid by tenants], only issue is heat is gas, and it's not separated, so I'll have to built that into the rent.

Other similar rentals on the block are asking around 750 to 850 where tenants pay for all utilities. 

So my analysis:

Rent at: $850 include gas heat [costs 100 to 200 per month average out one year] one garage space $60

Rental income: 1760 [annual 21120]
vacancy rate: 12% 211.2 [2534.4]
net rental income: 1548.8 [18585.6]
Gross income: 1461 [18585.6]

Property tax: 2661.29
insurance: 800
property and repair: 20% $3717.12
Gas and heating: $2000
annual total expenses: $9178.41

NOI: $18,585.6 - 9178.41 = $9407.19

Cash Flow = NOI – Debt Service:

$5953.71 = 9407.19- 3453.48 [30 year, 10% down 4.25%]

$4126 = 9407.19 - $5281.08 for 15 years same terms

Cap Rate = NOI / Property Price

Cap rate: 9407.19/65000 = 14.47%

Am I missing anything? Thanks a bunch for your time.