You should also check the units carefully for deferred maintenance.I'd recommend using an 8% Vacancy Rate (1 month out of every 12), just to be conservative.Good luck!

You should also contact the Property's Management Company, to gain insight into whether there is Deferred Maintenance, the actual rents being paid, how the property has been managed in general as well as the age of the property, the age of the roof, the age of the major electrical system, the age of the major plumbing system, and other applicable major systems.

Christy,I recently sold a self serve car wash and then used those funds through a 1031 to purchase a 32 unit apartment, deferring over $200,000 in taxes.

The low deferred maintenance and high, value-add component.

On my commute to work and while driving to other rental properties I looked for other multifamily properties, preferably properties that had some deferred maintenance and also had more than 2 units.

However, I have a $250K of equity in my house in terms of a HELOC that has a 10 year deferred payment option at 3%. 

You broke the 200% rule (unless you purchase at least 95% of the value of the list meaning all 5)2,  Now the leverage question  - In order to defer all tax you must purchase at least as much as your net sale (1 mil). 

Completing a 1031 Exchange allows you to defer that tax and depreciation liability and invest in another rental property.

Solid buy and hold with minimal deferred maintenance.

Solid buy and hold with minimal deferred maintenance.