Am I Crazy?! Overestimating? Or is the market waayyy too hot for me?

[Paulina Purnama]

Click on the pics above for the MLS listing^^^^^^

Sorry for the dramatic title but I am really having issues with my numbers. I was hoping some of you guys could help me out. This is my first investment property. I've been stuck in analysis paralysis.

My numbers always get me pretty lousy caps and cash flow rates yet the properties I look at sell within a day or so. So someone is buying these. I hope I am calculating things propertly and not over estimating.

Here is an example of the most recent property I looked at:

http://www.realtor.com/realestateandhomes-detail/1...

Labeled as a Duplex but has four "sleeping rooms" in the basement along with a bath. No kitchen. Kind of a dorm. Property is right next to a big university in town. Solid B neighboorhood. Older property with baseboard electric heat and electric water heater.

Asking $225,000

Rents are $885 for each duplex and $315 for each of the four sleeping rooms (all current leases are month to month)

Total income: $36,360 annual - vacancy (I'm assuming 6% vacancy rate)

Utilities: $8500-9000. Owner pays heat. Owner pays electric for all basement sleeping rooms. This includes water, sewage and trash as well.

Taxes: $3000

Insurance: $1500

Maint: $3636 (assuming 10% gross rents)

Prop Mang: $3636 (again assuming 10% gross rents)

Lawn & snow: $1200 (assuming $100 per month) we are in a cold weather climate with lots of snow

SOOOO....

My numbers:

225,000 purchase price with 25% down (4.5% interest rate 30 yr) and $2000 closing costs

GOI: $34,178

Expenses including utilities and prop mang: $21,972

NOI: $12,206

Cash flow after mortage: $1946

Cap rate: 5.43%

Cash on cash: 3.34%

To me these are lousy numbers and I would never buy the place but it sold in one day! This is not unique the past few months. I've been outbid on numerous properties with very mediocre numbers.

Are my numbers off? Am I over estimating? Why are these selling soooo fast????

Any advice would be greatly appreciated.

Thank you!!!