First time Real Estate Deal - Am I Missing Anything?

[Evan Webber]

So I have been thinking about jumping into REI recently, and I have a partner and my eye on a property (well actually two, but they come as a pair). Both properties are 4 unit multifamily apartments with 2 beds and 1 bath and 1100 sq. ft per apartment. My area is a small rural community in Central Illinois. The apartments currently rent for $400/unit, but with the quality and size of the apartments, I plan on raising rent to $450-$500 for new tenants. The current owner built these apartments in the 80s and no longer has the ability to maintain them and run the business and is looking to get out.

This is my first real estate analysis, so I am looking for variables that I may have missed, or if my assumptions are false.

Mortgage - $716 ($175k purchase price)

Insurance - $515

Property Taxes - $200 

Vacancy - $226 (7%)

Maintenance - $165 (5%)

CapEx - $160 (5%)

Gas/Electric - $176

Water - $60

Garbage - $130

Income Taxes - $432 (this is using deductions for interest, depreciation, maintenance, travel, property taxes, and insurance) 

This leaves me with a positive cash flow of $457 using the current $400 rent price, so it would leave me some wiggle room for raising rent. Me and my partner would maintain the units ourselves.

I appreciate any insight anyone can offer for a first time buyer and landlord, and feel free to let me know if I am off base on any of my calculations or assumptions.