3 Plex deal I need help with.

[Paulina Purnama]

Hi guys, I'm new to investing. My first potential purchase! Having a little trouble deciding if this is a good deal for me or not.

I'm in Fargo North dakota. This is a three plex in a older neighborhood. House was built in 1910 but is nicely updated. Should not expect a lot of older house maintanence but I guess I never know.

Seller purchased last year for $145K. Had house inpection that showed a block wall (foundation) in basement is tilting in a bit but inspector just said to monitor it. No other major issues. New electrical as well.

Rents at that time were $435, $550, and $600.

Seller hasn't done much but is now asking $175k! Says potential rents are now $500, $700, $700. I called him out on this though.

I ran the current numbers through a calculator.

thinking of offering same as he paid a year ago.

Purchase Price $145,000 Down Payment $29,000 Loan Term 30 Years Interest Rate 4.50% Principal & Interest Payment $588 Closing Costs $5,000 Gross Scheduled Income (GSI) $19,020 Vacancy Rate 8.00% Number of Units 3 Pro-forma Income Statement & Cash Flow Gross Scheduled Income (GSI) $19,020 Less Vacancy $1,522 Total Actual Annual Income $17,498 Other Income (Laundry, Late Fees, etc.) $0 Gross Operating Income (GOI) $17,498 Annual Opertating Expenses Electricity $480 Gas, Water & Sewage $1,200 Landscaping $400 Maintenance & Repair $1,800 Property Insurance $1,800   Property Management $0   Real Estate Taxes $1,700 Snow removal $1,000 Total Operating Expenses $8,380 Net Operating Income (NOI) $9,118 Annual Debt Service (mortgage payments) $7,053 Before Tax Cash Flows (BTCF) $2,065 Key Operating Ratios Capitalization Rate 6.29% Cash on Cash (COC) 6.07% Gross Rent Mulitplier (GRM) 7.62 Net Income Mulitplier (NIM) 15.90 Debt  Coverage Ratio (DCR) 1.29 Expense Ratio (ER) Per Unit 47.89% Price Per Unit $48,333

What do you guys think?

You think he would consider less than what he paid just a year ago? He said he is moving out of town.

Currently his brother lives in one apt. The other two are un occupied.

Too risky for first time investor?

Also I can afford to buy all cash, would that make more sense or would it be better to leverage bank and obtain a loan?

Thanks for the help!!!