Good Numbers? Not So Good Neighborhood?

[Frank Mancuso]

I've been looking for a multi-family unit to add to my portfolio and my property manager called me with a deal that fell through and the current owner wants to unload it.  

Details:

5 units - Large home that was converted to 5 units a long time ago, all separate utilities

Location: Philly (Not a very desirable neighborhood)

Purchase price - $160k (but I may be able to get it lower)

Monthly Rents - $2595, no vacancies no section 8

Monthly Expenses - $2049, estimated vacancies of 10%, 6% repairs, 7.5% ($200/month) capex, 11% mgmt fees and using the actual tax and estimated insurance numbers

I also estimated $4k for closing costs and $10k in repairs (no major repairs on needed, this is just a cushion because I imagine there is something)

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CoC ROI = 14.2% / $545 monthly cash flow

Pro Forma Cap Rate = 9.47%

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My concerns/questions:

- Am I analyzing this right?  And how good are these numbers?  Better said, how often to people see these numbers in major cities currently?  

- My property manager has managed this property for years and says it performs well.  The neighborhood isn't desirable but he gets the rents.  

- Being a 5 unit building, how worried should I be about resale being that it's commercial?  Same with the fact that it's a conversion?

- How picky are you about a building that was converted?  This is very common in this neighborhood given the size of the houses back in the day.  

All insights appreciated!