MF Deal in the Midwest - Gray Area - Is It Worth Pursuing?

[Rob McKay]

There is a 12 unit multi-family that is on the market in a college town near where I live. The units are 1 and 2 bedrooms and priced just about at market. The landlord has moved out of state and this is the last of her properties and she just had a sale fall through, so she may be more apt to negotiate. The numbers are right on the edge for me, so I'm hesitant (2% rule is at 1.44% and the we are under the 50% rule) . Your thoughts would be greatly appreciated.

Here are the numbers:

Purchase Price             $ 325,000 

Rehab                             $ 25,000 

Total Cash Investment  $ 350,000 

Total Monthly Rent            $ 5,025 

Vacancy Factor                      10% 

Laundry                                $ 150 

Total Monthly Income        $ 4,673 

Management (10%)              $ 503 

Maintenance (10%)               $ 503 

Taxes                                     $ 564 

Insurance                               $ 300 

Utilities                                   $ 426 

Total Monthly Expenses     $ 2,296 

Monthly NOI $ 2,377

Annual NOI $ 28,524

I've asked for receipts and bank records to verify expenses and they are forthcoming. The occupied units will take about $5K of rehab once they turn over (there are 2 tenants that have been there for 10+ years). Should I take the plunge?