First purchase of an multiplex 16 units, what are some of the pitfalls.

[Ken Fricke]

Location: Pinedale,Wyoming

Property: One lot with an 8 plex, one bed one bath units, currently renting for $500 

one lot with two plex's two bed two bath units, currently renting for $ 850

Property also comes with five lots zoned commercial, The county said they would rezone them multi family if we wanted.

Owner: bank owned small regional bank with two locations

Asking Price:  $690,000.00

The tenants pay there own utilities, the bank has owned the property for two years and has tried to manage the property themselves they have had an average vacancy rate of 50% I talked to two different property managers in the area they said they could have it rented at 10% vacancy at least that is their track record for that area.

The pros of the property and the deal in my view:

Great location located close to the oil fields yet has an excellent view of the new fork river.

Bank owned so I think I could get a great purchase price working with a small regional bank.

The possibility of leasing directly with the oil companies for multiple years.

The Cons the best that I can tell:

Gas prices and oil prices are down an the biggest driver of the economy is gas and oil some risk involved because of the economy.

Property has a bad reputation of being the ghetto of pinedale 

Property needs some work my estimate is around $50 thousand mostly on a retaining wall on the back side of the property.

Rent on the units is down from two years ago when the one bedrooms were renting for $1000.00 and the two bedrooms for $1500.00.

More general information:

I have around five years experiance part time in real estate investing, I have 20 plus years of experience in building, I have flipped four houses, I own two investment properties single family residents that I am currently renting out, I am ready I believe to make the jump into multi family housing, I would like to get any help or advise that members of bigger pockets may have so that I do not miss anything that may cost me a large amount of money.

The cost i have taken into considerations when figuring out the cap rate are as fallows

Vacancy 15%

Management 12%

Maintenance 10%

Repair 5%

Insurance $420 a month

Taxes $420 a month

I am relatively new to bigger pockets and real estate investing so any ideas and or recommendation would be appreciated.

Ken Fricke