Denver, CO Triplex Deal Check Request

[Paul Lee]

Hey BP members, 

I need a quick sanity check on the math here just to make sure I'm not biting off more than I can chew.  I'm currently under contract for a triplex, which I will be occupying one unit (2 BR, 1 BA) for a year before renting it out.  A little backstory on the property: It was built in 1880 and last sold in 2004.  The seller has not changed rent prices for years, resulting in the previous tenants staying for more than 5+ years and paying way below market rents.  Based on my research of Craigslist, Rentometer, and Padmapper, 1 BR / 1 BAs go for $1,100 - $1,500 and 2 BR / 1 BAs go for $1,400 - $1,900.  A current tenant on a month-to-month lease pays $900 for the 1 BR / 1 BA.

**The following analysis assumes that I move out and have all units being rented out.

Denver, CO (Baker) Triplex

List price: $620,000

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INITIAL INVESTMENT: $129,780

ANNUAL PRE-TAX CASH FLOW: $7,100

CAP RATE: 5.13%

CASH-ON-CASH RETURN: 5.47%

IRR: 12.85% per year (30-year hold assumption, 3% increases in rents / expenses)

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INCOME**

Gross Rental Income UNIT 1 (1 BR / 1 BA): $1,150

Gross Rental Income UNIT 2 (1 BR / 1 BA): $1,150

Gross Rental Income UNIT 3 (2 BR / 1 BA): $1,600

Vacancy (6%): $234

TOTAL INCOME: $3,666

EXPENSES

Prop tax: $517 ($6,204 annual)

Insurance: $110

Maintenance & Repairs (10%): $390

TOTAL EXPENSES: $1,017

NET OPERATING INCOME (NOI): $4,683

DEBT SERVICE

Loan Payment: $2,058

TOTAL DEBT SERVICE: $2,058

MONTHLY CASH FLOW: $591.47

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Am I missing anything for my analysis?  I know some people factor in property managers in their analysis.