8 unit in ohio

[Aaron Smith]

Hi there BPers,

I have a deal in a D area.  Mistake #1 right?  However, I think the property is selling a very nice discount. The rents maybe 50-100 under market.  Details:

$175k, 8 units, built 1966, $450 each unit rent

assume 10% vacancy, 55% expenses, 4% interest rate, 25% down.

Before raising the rents (basecase), I get 1.85% monthly rent to purchase price (2% rule)

2.33 debt coverage ratio, 10 CAP, 21% cash on cash.

All in all, not too bad.  I'm unaware of the condition inside the units (outside looks good) and what would take them to get up to market rents, but the numbers look good enough to make an offer.  I figure, despite it being in a D area, if I can create value and raise rents to market, it could be a good investment.  However, selling may be the issue, because of the area.  What does everyone think?