Hi Andrew,
Your math is correct as far as the calculations. I think it is important to understand a bit more about the assumptions that go into the equation, to see how much it can vary.
You mention wanting to purchase at a 10 cap. Take the same numbers you have and look at what the purchase price would be at a 9 cap, and even an 8.5 cap. A little change in cap goes a long way, and while everyone wants a 10 cap (and I don't know your market there in Maryland) there are plenty of places where an 8 cap is a great deal!
To understand the prevailing cap rate in your area, first let's look at what goes into a cap rate. An investor may have a specific cap rate floor, which serves as the lowest rate they will purchase a project at; however, the market cap rate - or rate at which a building owner can expect to actually sell their property is determined by the supply in the area, demand for that area, and the amount of deferred maintenance in the property (which does NOT include things like adding duct work or adjusting layout to get more units) but does include things like the roof, windows, lead paint, fire doors, electrical wiring, plumbing, etc. All of the main infrastructure of the building. Two side by side 6-unit buildings could produce the same NOI, but not trade at the same cap rate purely due to the level of deferred maintenance in one building or another.
You can look up recent sales in your area of multi family properties (look at 6-10 unit properties - 2-4 units would be a different class and may or may not trade at a different rate). Most recent sale listings will still publish gross rents and "expenses". Calculate the cap rates at which they traded, and use photos / descriptions to ascertain the level of deferred maintenance present for each. You should be able to find a range for that area. When we did buildings in Manhattan, we got EXCITED about anything we could purchase at a 6 cap or above! If we got a 7 cap, it felt like stealing! In Kentucky, we bought a property at almost a 12 cap - and I would NEVER have paid at a 10 cap there.
I say all this because if you take your example of $55,200 gross with 60% exp, the 22,080 NOI at an 8 cap would bring your purchase price to $276,000. Quite a swing for two little points.
The other assumption I would examine more closely is your 60% operating expenses. That seems high, and would be exceptionally high if you converted utilities to tenant-pay. On a 10 unit building in one of the highest property tax cities in the country, WITH landlord-paid utilities, our stabilized operating expenses are 48%. There is a certain economy of scale that you benefit from - the more units, the lower that percentage goes (to a point). On a 105 unit property in New York, our stabilized operating expenses were in the low 30s! Now on that project, they started at about 45%, but through a full renovation, we reduced maintenance costs, and bringing rents to market rate pushed the top line up (expenses don't rise at the same rate as rents).
While I don't have a standard % for you to use - this is something that is very easy to get a fairly accurate estimate of. You can lookup taxes online. That is one of your largest expenses. When you research recent sales to compute the area's cap rate - you will find information about what others are paying for things like insurance, trash, and water/sewer. As for utilities - take the numbers from your own home and adjust by the number of rooms in your house. Multiply that by the number of rooms in each unit and add up the total. This will give you a good estimate. If your house has 8 rooms and your heating bill averages $200 for 8 months of the year, thats $25 per room for 8 months. If the two bedroom apartments have 4 rooms (2 beds, kitchen, living room), then add $100 for 8 months ($800) for each of the 2 bedroom apartments. Add $1000 per unit for repairs and maintenance assuming that you're going to at least do some renovations in the beginning. Add $2,000 per unit if you're not expecting to touch the units.
Once you figure out the prevailing cap rate in the area, and have a better estimate of operating expenses, you will probably find that the owner's price and what you can offer will be less disparate than you at first thought.
If you want help going over the specifics, shoot me a message and I'll happily take a look.
