Best path

[Agedi Boto]

Good repositioning deal?

Got these specs: 6 unit near the town center (decent town) in a tougher blue collar neighborhood. Property has no manager and has been so badly neglected that there are directv dishes all over the front surface. There is graffiti on one nearby wall and focal graffiti on the building itself. It is 100% occupied and 4/6 current tenants are section 8. Income is 56,000. Expenses are only 21k and include 8,000 of electricity and gas (for some reason the owner has agreed to pay for these utilities for certain units). The current owner is out of town and has no management on the ground (there's a maintenance guy that stops by sometime) so I would have to add that. So, NOI is 35k and the asking price is 325k so the cap rate is over 10%. However, I know that when I raise rents occupancy will drop. If the place were spruced up gross income could be increased to 72k I believe. I live nearby and wouldn't mind making it a little project.

My plans: First hire a manager. Then, I figure the directv dishes are from previous owners so I should be able to take them and their associated wires down. I could spruce up the area around the apartment and call the city telling them to paint over the graffiti (or asking permission to do this?). If I could get the seller to finance 25% of the deal what price would be reasonable to make this profitable and reasonably safe for me (and what are my worst case scenarios if things go south on this deal; could the seller then sue me for the balance that he financed after the bank forecloses)? What kind of cash reserves should be present to have a good chance of success? Thanks for any help you can give