Too Good To Be True??

[Keith Martin]

I have been looking for multi-family opportunities to get started in REI. I've come across this deal that seems too good to be true. Help me understand where I've gone wrong on the 24 unit deal.

I have put in some assumptions about mortgage rates, terms, interest only, etc.  I have a quote from a management company for 6% of gross rent collected plus the cost of staff allocation (still to be nailed down), so I left a figure in Maintenance to allow for that in addition to the 6% they quoted.  

It meets the 1% rule and the 50% rule.  It's running at an 8% vacancy and I figure we can get it to 5% with better management (there is some evidence of lackluster management).  But the numbers work at 8%. I have a 2% rent inflation rate built in. I built in some inflation on the expense side in the out years based on the ratios in Yr 1. 

My target goal is a cap rate of 10%. With a purchase price of $720K it yields a 11.3% cap rate. With the numbers I have run, the NOI and my target cap rate yield a value of $815K so maybe not a lot of room to get a 10% discount. After Yr 1 with resolving the vacancy rate, it looks like I could re-fi and get some equity out for further investing.

I go by the doctrine of if it seems to good to be true it usually is, so BP'ers, what am I missing?  I'll get better details of the costs once I get into the due diligence phase.