11 unit deal. What am I missing on this one?
I've got a deal that looks too good to be true, but I can't find anything wrong with it. Can someone, or several someones look it over for me?
It's 10 Units near SLC, Utah.
Purchase Price - $400,000 No special terms
Gross Rents - $83,820
Gross Expenses - $ 46,453 (Including $13,000 Utilities, Tax, Ins. 3% capex reserves, and 10% for each of Vac/coll loss, management, and maintenance.
NOI - $28,985
Rents are pretty much at market rate. I'm more scared about them being high than hopeful about raising them, but the contracts match the rent roll
Expenses have been verified with bills and tax returns except for my %10% figures on maintenance and vacancy/collecitons and 3% capex reserves.
Management: It seems to have so-so management. The manager is a guy on his own, works out of his car, and just hits the streets. He knows everything about everybody in the area and the tenants know and like him. He collects rent in cash and keeps mediocre records of income/expenditures.
Location: t's in a low income area. only 1 or 2 of the 11 residents have cars. Parking might be a problem if not for this fact.
Where would you all dig deeper? Am I missing anything?