Duplex or Quadplex Potential Deal

[Carl Edelman]

Hi all,

First post...I think. Anyway, I found an off-market deal from a seller locally and ran it through the calculators. I can comment or post them if it would be helpful but I wanted to get input. The seller said it could be sold as just one of the duplexes or both. They are all 2 bed 1 bath. I would guess the building hasn't seen any updates in 20 years. Seller claims to have replaced both water heaters within the last 3 years, but I am hesitant to believe him, and am factoring in replacing all four water heaters. It has baseboard heating, so no furnace, no issues there, seemed to be working fine when I was in one of the units (obviously will want a discount or have the ability to access all four units). Tenants cover all utilities. Building was built in the 80's and electrical checks out. The roof is cedar shake shingles that seem warn out.

Asking Price: 260K; Current Rents: $650/unit/mo; Est. Mkt Rents: $750/unit/mo; Est. Rehab: 0-40k (depending on desire to update interior); Taxes: 775/duplex (avg); Insurance: 4k/year; Vacancy: 3%; Mgmt: 10%; CapEx: 8%; R&M: 5%

Based on my analysis seems like a flub at ask, but I am curious as to what others think. The best number I came to was roughly 130-140k. I don't want to insult the seller, but they are asking FMV of fixed up comps in the area.

Am I missing something here? This is the best I've seen in over a year, but I'm still nowhere near comfortable with these numbers. Any advice on talking to the seller?

Thanks