Deal Analysis: High Demand, High Rents, Junky Old Apartment

[Ryan K.]

Looking at a local 6-unit apartment building.  Buy for $580k.  100% rented to long-term tenants below market, demand is very high, low vacancy forecast.  Rents range from $775-900/mo, grosses $59,100.  Could probably be raised to $1000-$1300, gross $82,000.

Redevelopment would be very difficult because the lot is very small and there is no on-site parking.  Highest and best use is likely patching up this 100-year old building and maximizing cash flow (add on-site laundry?), maybe sell in 5-10 years, maybe hold for my baby's college fund.

I'd likely do traditional commercial lending, 25% down.  I self-manage 3 res units in town now, would likely self-manage this and hire out any bigger job.

The building is at least 100 years old.  Kinda crappy.  New roof, stucco looks good, some units have been renovated in the past 15? years.  There is upside in rents.  There is possibility for new cash flow with on-site laundry (maybe even from the local neighborhood).  The downside is it could be a maintenance nightmare.

Anyone have a solid estimate for expenses on an old 6-plex, before financing?  50% of potential gross income?  I've ran scenarios, ranging from 65% PGI to 80% PGI (best case).  Trying to decide if this is legit or if I should run away.