12 Unit Analysis

[Melissa N.]

Hello everyone! 

I'm working on a deal and need some advice. Here are the details:

Her husband bought it in 2006 for $470k. He passed away shortly after and she's been running it ever since. She's now in her 80s and she hates keeping up the building (she self manages and sweeps the floors). 

They have not kept up with market rents so each unit is about 100 under market and vacancy is a bit high for the area since she doesnt do much advertising. It is a C+/B area so I like the potential. Growth in the area has averaged about 5% over the past 10 years. 

Ok, now the math:

At 440k it will provide only about 300 in cash flow (so basically nothing). My plan is to get the units to market, lower the insurance cost (they are crazy!), and reduce vacancy through better marketing and a professional property manager (who just so happens to be right next to this property).

After changes, and including 5% savings for cap ex, I project $1760 in cash flow. Since it's a commercial building that will bring the value up 80k in forced appreciation.

Deal or no deal? Any thoughts on creative financing to make the 'day 1' better?