Tri Plex in Tucson, AZ Help me analyze this deal

[Alex Verdugo]

I have run this report a few different times and always end up with a negative cash flow.  I can see the problem is mainly with the insurance that I would have to have on the property.  Most insurance companies I've talked with and through looking at the various insurance estimates on the county assessors page, insurance will be somewhere between $1200 - $1500/ month.  i realize that the monthly income is $1665 and that the insurance eats up most of that.  Add in all the other precautionary deductions and I'd have to pay for the priviledge of owning this property. Even if this property was given to me in perfect condition, I would end up owing at the end of every month.

The current tenents have been there for a couple years. I have only seen pics of the outside of the property and it looks nice.  Unfortunately, or fortunately, it's located right around the corner from my current residence and I've seen the outside in person.  I wouldn't say that it's trashed but there is definitely a lot of clean up that could be done to make it look much nicer.  My personal experience has been that if the outside is trashed, the inside isn't going to be much nicer.  I wouldn't have a problem ending their current leases and starting at a higher rent.  I think that going this route might end with all three units being empty right from the begining.  Would it be better to start new leases and step up the rent until it is at $2100/ month?

What is it that I'm missing?  Is this just a bad deal and most likely the reason that the current owner is trying to sell?  Have I over estimated something that shouldn't be as high as I think?  Is there something else that can be done to make this a good deal?

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