First Analysis- Looking for Advice

[Kristin Wollmer]

Hi, I just joined BP and am analyzing my first deal in Wisconsin. At first glance this property I found on Craigslist seemed like a good deal, until I ran the numbers. It is a 6 unit fully rented (5 one bedroom, 1 two bedroom) property built in 1861, 5,304 Sq Ft with a newer roof and boilers. Purchase price is $215,900, seller says refinance evaluation is $275,000, tax assessment $165,000.  Current monthly rent is $3,100, although Rentometer suggests $3,475. 

Yearly Expenses- 

Taxes $4,540.00

Insurance $1,278.00

Sewer-water $1,500.00

Rubbish $1,200.00

Gas-Electric $3,475.00

Lawn $ 840.00

Snow $ 425.00

misc. $ 200.00

After running the numbers cash flow is $-583.00 (including 10% vacancy, 10% property management, 10% Cap Ex, 5% repairs and debt service) Total monthly operating cost $13,522, mortgage $1,455. The cap rate is 3%. Cash deal would bring me closer to $600-800 cash flow using my rough numbers.

Looks like using the 50% rule my operating expenses are $1000 too high. Using the 2% rule my purchase price should be $155,000.

Given the operating expense is there an offer that would work? 

Thank you in advance for the help!  I am looking forward to getting involved in the BP community.