First Commercial Deal--Need a little help. :)

[Tommy Vise]

I came across a 6 unit apartment that the owner wants to sell.  The complex is an old school board building that has been turned into a 6 plex, all with there own entrance and parking.   Has a new roof, new plumbing and good electrical systems.  

All of the apartments are Furnished with Antique furniture.  The owner is VERY picky about her tenants--No pets or children. :(

I'll give you the numbers:

She is asking $150k for the deal, with the antique furniture.  130K without the furniture.

The avg apartment rents for $600/month x 6 = $3600

3600 x 12= 43,200  (Income)

Expenses= 1,500 x 12=   18,000 (expenses)

43,200-18000=$25,200 (NOI)

NOI/Price=Cap Rate

25,200/150,000=  16.8%  Cap Rate with the furniture

*25,200/130,000=  19.4%  Cap Rate without Antique Furniture

NEGATIVES= 1.  Water and Electricity are on same meter.

2.  All of the apartments are not rented because the owner got her note paid by just having 2 renters.  So, I will have to get some quality renters, which should not be a problem in this market.

So, What am I missing?  Is this a good deal?  What other info am I forgetting? 

Thanks for your advice. 

[Jean Bolger]

On the face of it , around 22k each for apts that could bring in $600/mo is a good deal, but be sure they will really get that. Furnished apartments usually go to transient short term tenants. An apartment furnished with "antiques" will have a very tiny number good of potential tenants. (Her reason for why the other apartments aren't rented may be true, or...)  So ignore (and don't buy) the furniture, unless you have expert knowledge on antiques and can be sure of their resale value to you outside of this deal. I think you'll do much better without it.

Personally, I don't like places without tenant paid heat, etc-- but maybe your costs for that down in Alabama are pretty reasonable. Or you could look into a ratio billing system.

Also- i'm pretty sure that the current landlord is in violation of Fair Housing laws w/ the "no children" policy, so just be aware that that  is something to avoid if you do go forward with this. 

good luck!