Is this a good deal on an 8-plex? 13.92% CAP

[Ryan James]

8-plex, All 1BR/1BA units. Tenants pay electric and water (individually metered). 6 Units newly renovated and are rented for $475 each per month. The remaining 2 Units currently being renovated. Seller is asking $240k. Property management company already in place. I'm a beginner to multi-family and trying to figure things out. Let me know if this is a good deal and if I am not factoring anything. I was thinking of offering $215k ish.

I'm coming up with the numbers below...

$215,000 Purchase Price
$3,800.00 Projected Monthly Income (with all 8 units rented)
(Current rent is actually $2,850 with 6 units rented)
$2,177.50 Monthly Expenses
$1,622.50 Monthly Cashflow
13.92% Pro Forma Cap
$29,928.00 NOI
13.92% Purchase Cap Rate

Total operating expenses: $1,306.00
Mortgage expenses: $871.50

Vacancy @ 7%: $266.00
Repairs @ 5%: $190.00
CapEx @ 5%: $190.00
Insurance Est.: $60.00
Management @ 10%: $380.00
P&I (30 yr, 4.5% estimate): $871.50
Property Taxes: $220.00

***Total Monthly Cashflow using 50% Rule: $1028.50

[Anton Ivanov]

@Ryan James

My observations:

• Vacancy at 7% on an 8-plex seems low. I would do at least 10%. Judging how the rents are $475/month, I'm also guessing this is either a C/D area or a very small town, which may contribute to higher tenant turnover, higher lease-up times, higher possibility of missed payments, evictions, etc
• Repairs at 5% also seems low, especially if I'm correct about the tenant quality/neighborhood this is in. If it's an older building, with aging systems, like @Owen Dashner pointed out, you'll have even more expenses maintaining everything
• Insurance Estimate at $720/year: if you really can insure an 8-plex for $720/year, please PM me because I'd really want to know the carrier. Even my master commercial policy is not this cheap
• Missing utilities? Do the tenants pay for 100% of water/sewer/electric/gas/trash? I would double check that there aren't any common utilities you will be paying
• Missing landscaping? You will be responsible for snow removal and landscaping of the property. If you want it to look nice and have good curb appeal, don't skip this!