first investment property & have an opportunity on a 12 plex..... Help plz!

[Jt Biegler]

Looking to get into our first investment property and have an opportunity on a 12 plex. 

My wife and I have been looking into getting into a rental to start our investment journey and have been looking at duplexes/ 4-plexes because they seem to make the most sense on paper. 

Came across a 12 plex in a small city that is about an hour and a half from us with an asking price that is around $620,000 which is less than the cost of 3 duplexes in our area. 

Looking to see if this deal makes sense.

Concerns are: 

In a very small town with a population around 1800ppl but slowly growing 

But could limit renters, management, repairs etc.

Zillow also shows a decline in the property over 200k in the last 2 years (trust this) 

We would be financing the deal and tried to be conservative with the numbers. 

Built is 1957 - 8400sqft  and seems a little dated inside

1 - 2 bed 1 bath unit

11 - 1 bed 1 bath units  

Owner currently pays water, electric, trash 

Claimed monthly rent is $8,650 (small town and small units) 

Estimated Monthly operating expenses $5,278 (set cap reserves at 15% & includes management) 

Coming up with:

NOI - $3,361 monthly - $40,334 yearly

Cash flow - $3,361 monthly - $40,334 yearly

COC 21.86% yearly

Cap rate 6.25% yearly

I welcome any and all feed back

[Everton Souza]

These numbers seem a little off. How are you looking to secure this? Financing is what could make or break this deal. The size of the building would mean that if something goes wrong in the deal, the ship would sink fast. 12 units is also heavy for a first timer. I would say get together with a trusted accountant and loan officer, both who have experience in rental property, and dig deep into the properties financials. Then once you are comfortable with the numbers, do a deep inspection of the property itself to make sure that you would be able to manage any maintenance issues that come up.