Need help analyzing pro forma expenses...

[Alex Flowers]

I recently received an appraisal from an owner of a commercial property I am interested in. The appraisal was done 6 months ago for a pending offer that fell thru. This is my first step into multi-family, so I have a few questions regarding the expenses reported by the owner. The property is a 6 unit building,a 2 unit building and a mobile home. The apartment buildings are all less than 20 years old, have had metal roof in the last 5 years, and seem to be in generally good condition. Pro forma total rents equal $45k after vacany adjustment.

The Analysis used to determine the net income for the property allocates 1.66%, or $750 to repair and maintenance annually, 4%($1800) to administrative/management expenses, 3%($1400) to general services and 3%($1350) for reserves. Obviously the number for repair is low. The owner himself told me he does a poor job of record keeping and really can't say with any certainy what that number should be. He is in his mid 70's and does all his own maintenance. I don't have an opinion on the administrative and general services, but the reserve fund seems rather low. He indicated the mobile home tenant is responsible for maintenance on that unit. All together with taxes insurance and water, the above equals 31% of gross rents, giving me an NOI of $31K. How do I determine a fair number for NOI? What else am I missing from the expense side?

Thanks in advance for any assistance.