18 apartments with units titled as condos

[Ken P.]

I am a SF investor looking for the first time at multi-family. The property in question is a block of 18 1BR condominiums currently being operated as apartments. They are part of a tranche of ~40 condominiums that the current owner once held in a development from the 1970s, spread out among several 12-unit buildings. He sold a number of the units individually when the market peaked in the early 2000s, and now wants to get out of active management of the remaining 18 units.

Now for the numbers:
Asking price $450k ($25k/door)
Gross rent - $112k
NOI - $48k. I would probably drop this about $3k-$4k to increase furnace/AC replacement provision

Expenses included are property tax, interior repair and maintenance, vacancy & lost rent, and the biggest, hefty association dues of $120/unit/mo which take care of the exterior and commons. The buildings are in good shape, and the HOA dues are covering roof replacements, paving, and other major expenses without special assessments. Tenants pay all utilities.

100% occupied, largely with long term tenants. He has rent history to show that he hasn’t stacked the units with tenants to make cash flow or occupancy look better. The downside is rent is at market rate for most of the units, and obviously occupancy has no room for improvement, so there isn’t much income upside potential.

Terms offered are 25% down, with land contract on the balance, 5/20 year @ 6%, extendable.
Cash flow with these terms is only $90/unit/mo, but over the 18 units yields enough that it’s 16-17% cash-on-cash, which is a number that I’ve jumped on when buying SF.

I’m looking for some feedback/additional questions to ask, as multi is whole new ball of wax from SF.