Sanity Check on a Tri-plex Deal

[Dustin S.]

Hi All just wanted to get a second opinion on a short sale Tri-plex I am under contract on.

So the Purchase is $357k its a 2/1 house plus a 1/1 and studio guest house/casita out back 

The 2/1 has been rented out in the past for $1500/m my rental comps show more like $1400

The last tenants were rough on the place and it needs $6k to $8k in interior work.

The 1/1 is fairly large and is currently rented for $1100/m, comps support it and the tenants seem pretty comfortable and want to stay.

The Studio is pretty small has been rented out in the past for $750/m comps say $700 maybe $750

Termite Report Shows $5k in work I can probably get the work done for about $3k and the outside needs to be painted another $2500. Seller is not gong to do anything.

Insurance is high $2400/ year  taxes $3800/year

Gas$65/m Trash $50/m Water $75/m Septic pumping $340/ year or less Electric $150/m

The electric to me seem very high since there is no A/C and no Major power consuming device. Electric at my primary is from the same company and my bill is typically $25-$35/m with 6 people living in the house.

So for my calculations in the current situation with 10% for maintenance 15% Vacancy and 5% for property management. I show a tiny bit of cash flow and think I will most likely have less vacancy. I think I can reduce the electric by replacing incandesant bulbs with LED and upgrading the refrigerators to more energy efficient ones. Also will look into getting the two buildings separately metered for Gas and Electric. My realtor also does property management and will manage for free the 1st year then 5% after that. As far as value I think I have some good upside potential. The area appreciates pretty well and is 10min to the beach. Currently just a 2/1 house on the same size lot in the area would sell for $300k.

Am I taking everything into account should I go for this even though the cash flow is very skinny?

Thanks