Small apartment building. Good buy?

[Thomas Brady]

Hey Everyone, 

I have been working with an investor trying to find a good rental property to go in on and I think I might have found a diamond in the rough.

Here it is: 

Asking $582,000

12 unit 3/2 apartment building

All units rent at 900/month so $10,800 monthly or $129,600 gross yearly profit 

20% ($116,400) down at 4.1% over 30 years = $2,250 mortgage per month 

50% rule deducts $5,400 

Total costs: $7,650/month which leaves $3150 net profit per month or $37,800/year 

COC return: $37,800/$116,400 = 32.47%

These numbers look very strong to me, but once again I would like the eyes of seasoned investors to look them over an see if there is anything I missed. 

FYI: I rant the numbers using a 70% rule and it still came out in the black. 

Thoughts????

[Matt Motil]

The 50 and 70% rules are great to get you going as to whether or not you dig deeper. Now that you see that the numbers make sense, it's time to dig deeper. I'd ask for actual expenses for the past two years, actual rent roll with vacancy history for the past two years and what the current rent roll for the building is. Once you have all that info you can run the numbers again. If it all still seems to make sense, then you want to look into deferred maintenance on the building and start the due diligence to determine what problems you will be buying along with the building.