Multifamily Analysis Question

[John H]

What do you guys look for when considering multifamily properties?

I'm looking at a 7-unit property currently with the following figures:

*Total Gross income (Rent + Laundry): $78, 000
*Operating Expenses: (Based on 10% vacancy and including 8% management fee): $32,000
*NOI: $46,000

Based on a 7% cap rate, I'm getting at a value of around $650K.

In terms of upside potential, there is not much in terms of rent-increase or maintenance/management. The property is currently 100% occupied. However, in the operating expenses given, the vacancy is only given as 3% which seems low and there was only a minimal maintenance/management expense because the original owners performed it themselves (something which I do not plan to do).

Please give me any thoughts on the property analysis, especially how one might determine the operating expenses.