First Commercial Mixed Use Deal - Need Input

[Kris Kaufman]

Hello BP community! Wanted to post this deal on here to see everyone's thoughts and if they would proceed.

The building consists of 13,000 square feet. It has a large commercial restarant space, 9 apartments (1-2 BD), and 20 rooms rented on a weekly basis. The rooming house shares bathrooms and doesn't have any kitchens (no open flames permitted). It has 20 offstreet parking spaces and is located on the center square of a small town and decent neighborhood. The purchase price is $1,075,000 with the seller carrying a 2nd of 386K (4% on a 30yr) and a bank financed 1st of 689K (4.5% on a 25yr). Both are fixed for seven years. Outstanding terms!

Rents and expenses are as follows yearly:

Income at full capacity = $218,280 

         Vacancy (10%) = $21,828

         Effective Gross = $196,452

Expenses:

Taxes = $11,924

Insurance = $6,180

Electric = $6,100

Trash = $900

Gas = $3,736

Management = $15,716

Mantenance = $9,000

Water/Sewer = $6,370

Municipal Fees = $1,125

Advertising = $609

Rental Fees = $2,500

Cable = $1,815

Extermination = $1,100

       Total = $67,075

Income = $129,377

        Total debt payments = $68,052

Net Income = $61,325

Keep in mind, rents are low for the property and should be raised by an estimated 14k/yr. This would push NOI to $75,325. I feel the management fee is probably to low on this building, considering it's partially a rooming house, but the amount of cash flow would give lee way for higher managment fees. Please give me your thoughts and thank you for your insights.

-Kris