Apartment Deal... Or No Deal... How to tell???

[Cabrin Mills]

Hello BP, I have a question about a real life, hypothetical, potential deal opportunity. I know a little about commercial multifamily investing in theory, but have no practical knowledge on how to analyze a deal, or negotiate one for that matter. So if anyone has experience in this field please chime in, and let me know if it's worth pursuing...

Okay, I've seen an add for a 6 unit Condo/Apt building on Craigslist for a couple weeks now, and the guy want $170k. There is only one unit finished, and it looks really nice in the pictures. I estimated (based on the pictures) that it would cost probably another $170k to finish the remaining 5 units. He says that you could rent each unit out for $1000/mo, but I'll analyze 20% less and say $800/mo (Im awaiting information on that market right now).

So If we are all in at $340K with a

Annual Gross Operating Income of $57,600 ($800 in Rent x 6 units = $4800 x 12 mo)

minus

Annual Operating Expenses of $28,800 ( We'll say 50% of the GOI)

Equals

Net Operating Income of $28,800...

Divided by 

the GOI ($28,800/$340,000) you get a 

Cap Rate of 8.4% 

Now to my knowledge; I should be shotting for a 10 Cap. So, If the numbers checked out I would have to offer him Approx $118K to get a 10% cap rate. So where would I go from there? What else would I need to take into consideration when making an offer, or negotiating the purchase price? And is there anything that I'm over looking while analyzing the deal?

I greatly appreciate any feedback in advance. Thanks!