need somemore great advice

[Frank Gossman]

I don't want to keep bothering you guys but: Can you help with your thoughts som background. Property 10 plex purchase price
3yrs ago $ 1,995,000 on the market 2009 for $ 1,449,000 partners want out ( break up ) I asked if the loan is assumable lender says yes must quilifie. To assume the loan balance $ 927,285.00 rate
of 6.95% 2yr loan amortized 23yrs. Ok here is what I know annual
gross inc. 100% rented $ 107640,000 5 % vac.and collections
$ 5,382 other n/a taxes annual $18,000,insurance $6,483,
management $ 5,382, annual maintenance $ 10,716, utilities
$ 2,490,miscellaneous pool & sces $3,298.Oper. Exp.= $ 46,369
Net oper income=$ 61,271. I'm useing $ 200 pr/dr replacement.
When I did my work sheet I used $ 950,000 assum by 7% for 30yrs I got $ 34,000 annual dept +/-. Now the monthly rent collected comes to $ 8,790 the monthly expen come to $ 3,415.50
this does not include dept service. Now the cap rate is in the bucket 5% and the way I figure the property's value is less than what is owed I would say $ 700,000 I really think they are feeding the dragon. I believe that is all my question is to you is I want your thoughts and wise advice.I thank you in advance and I need your help yesterday. Thanks again I appreciate all your help !!!

[Jon Holdman]

This is seriously overpriced. You need to find a better deal. There's no way you're going to get this one for a decent price unless these guys are really, really desparate.

Here's my analysis. Its a bit hard to follow what you wrote, so please excuse me if I've read something incorrectly.
Annual gross scheduled rent: $107,640
Monthly rent: $8970
Average monthly rent: $897
Expenses, vacancy, capital: $4485 (50% rule)
NOI: $4485
Desired cash flow: $1000 ($100 per unit)
Max payment: $3485
Max price: $523,821 (30 year, 7%)

I think 30 year amortization and 7% is better than you're likely to get, but you'll also need a down payment.

If we use your $700K value, assume 30% down payment and 7%, 20 year amortization, I get:
Cash required: $210K
Loan: $490K
Payment: $3798
Cash flow: $684 per month
Cash flow: $8232 per year
Cash on cash return: 4%

Yuck!!!

At $524K, your cash on cash with a 30% down payment is 12.5%, which is a lot better, but still not exactly stellar.

Clearly, if someone paid two million for these they are losing money hand over fist.