Trying to close my first MF deal

[Masroor Ahmed]

So, I’d like advice on a deal from the BP family! I’ll share my estimates of the numbers (based on what was provided and my own adjustments) along w/ an update on our negotiations.

Asking price: $249,000

5-unit

C-class neighborhood. Moderate section 8 tenants spread around, but not crime ridden, many SFHs, etc.

Currently Fully occupied

4 2-bdrm+1bath / 1 3-bdrm+1bath

Rents: $840, $800, $800, $750, $1070 (3bdrm and sole section 8 resident) = $4,260/mo., $51,120 annual

$4,110 Vacancy factor (8%) [about avg for this area]

$250 Laundry Income

$47,260 Net Rent Income

$11,776 RE taxes

$4,726 Prop mgmt.

$2,563 Insurance

$3,016 Water/Gas/Electric

$1,968 Trash

$500 Snow and Lawn

$2,400 Maintenance and repairs

$26,951 Total Expenses

$20,309 NOI

I offered $201,000 on the property and the seller has indicated $220,000 as his lowest acceptable price. My desire is to achieve a 20% IRR with a healthy conservatism built in (I'm assuming $3K of unidentified deferred maintenance, 4% of monthly gross rent as capex reserve, and 1% annual appreciation). What would you do and why?