Your expense ratio (about 37%) seems low for any multi-unit investment...
Here are a couple things you are missing in the expense category:
- Property Management (are you planning to manage yourself?)
- Vacancy (does your income number assume 100% vacancy or less?)
- Maintenance (I assume you'll have some leaky toilets, etc)
- Turn-Over (when a tenant moves out, you need to paint, replace carpet, clean, etc)
- Capital Expenses (you'll eventually need a new roof, new HVAC, siding repairs, etc)
When you add these things in, I'm guessing your expense ratio will be somewhere between 45-55%, or somewhere around $21-25K.
That puts the cap rate on this deal at around:
Cap Rate = $23K / $177K = ~13%
So, a very rough first-pass analysis says that this may be a decent deal.
Of course, from here, you'll want to verify all these numbers (using tax returns, utility bills, rent rolls, deposit verifications, etc), verify actual copies of the leases to ensure that you're not losing more to concessions, verify that there is no deferred maintenance issues that you need to factor into the price, etc.
