Here are the details.Asking Price $275,0008 Unitsbuilt in 1987All are 2 bed/1bathRent is $500/month per unitOwner pays water/sewer/trashFinancials:They were not provided in the listing, so I am estimating on some costs.Down payment $68,750Closings Costs $10,000 (estimate)Mortgage Estimate $1361/month (estimated 5 year balloon, 20 year amortization, 5% interest, 25% down payment)Annual Gross Rental Income $48,000 ($500/month * 8 units)Vacancy Loss $4800 (10% estimate)Adjusted Gross Income $43,200Property Taxes $3018 (2013 actual amount)Insurance $1500 (estimate)Maintenance $4320 (10% Adjusted Gross Income)Water/Utilities $5760 (estimate $60/month per unit)Property Management $4320 (10% Adjusted Gross Income)Net Operating Income $24,282Operating Expenses $18,918Annual Income $12,468Cash on Cash Return 15.83%Am I underestimating key costs here?

I know we can get 850.00 and maybe 900.00 rent on this one.1100 s.f. 3/1.5/2 brick house roof 10yr old, heat. air and water heater new 3yrs  new insulated windows 3yrsStove micro  frig clothes washer and dryer all stay. nice fenced yard. 

While the HOA fees do diminish cash flow and can adjust year to year, it seems to me that by purchasing a condo within an existing HOA could actually save you money (no large expenses, i.e. water heater, roof, etc.)

The water from the sewer softened the foundation and the wall fell out and the house was condemned and had to be torn down.

It's a fantastic home with updated AC, furnace, water heater, roof, etc. but it's extremely dated.

I like public water and sewer, but I will look at private systems.

This motivated seller has a wife and two kids and trying to stay above water in their finances resulting in living with their parents so I feel troubled to request to add this item in the contract. 

Trina, my property manager, looked them up and they don't exist.The police REFUSED to act or intervene as this 'tenant' had a lease and said the only way to remove him is to file for eviction through the courts which will take 60 days.Trina is getting power and water turned off straight away to make it less comfortable for the guy.

@Zachary Mowery You don't have to pay the taxes and water each quarter.

This is related to my earlier post - http://www.biggerpockets.com/forums/52/topics/1349...I'm about to get him to sign an Early Lease Break Addendum stating that we will meet in the middle and he will pay for one of the two month's he is bailing on the lease and damages to the counters which were not easy water stains but probably oil stains and I will need for sure that whole month to get the unit back in shape.