8 unit In Tucson Deal Evaluation
I am doing a deal evaluation of an apartment complex here in Tucson, AZ. It is listed on the MLS here. Here are the details.
Asking Price $275,000
8 Units
built in 1987
All are 2 bed/1bath
Rent is $500/month per unit
Owner pays water/sewer/trash
Financials:
They were not provided in the listing, so I am estimating on some costs.
Down payment $68,750
Closings 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 $43,200
Property 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 $24,282
Operating Expenses $18,918
Annual Income $12,468
Cash on Cash Return 15.83%
Am I underestimating key costs here? Any advice in my analysis would be helpful. I'm not quite in the financial position to purchase this building yet, but I am trying to keep my eyes open to good deals, and this one looked good to me.