First Deal -- 5 Unit in small college town

[Lin Yang]

Hi BP,

First post! I'm hoping you guys can help a newbie out. I'm looking for my first rental investment and stumbled across this one in my small Midwestern hometown. It seems like an amazing deal -- so I want to run it by you all in case I'm missing something.

Property Details

Listed on MLS for $185k; on market for 249 days

5-units: 1 efficiency, 3 1-bedrooms, 1 2-bedroom

All units currently leased to students through Aug. 2017

3 blocks from local 4-year university that ranks top 15 in the state

Roof <2 years old; all furnaces <10 years old

Annualized Net Operating Income

Rent: $32k

Vacancy: 3% or $1k

Property mgmt: 10% or $3.2k

Taxes: $6.4k 

Water + other utilities: $2.3k

Insurance: $1.2k

Maintenance: $1.5k

NOI: $16.4k

Financing

I'm hoping I can negotiate the price down to $160k and put down 25% $40k 

Cash on cash return: 40.24%

Apparently the roadblock for this property has been financing since it's a 5-unit and would require a commercial loan. I'm calling up local banks tomorrow AM. If I can't find one willing to lend to me, between my savings and a few other folks who might be interested in the deal, I could offer cash.

Questions

• What other factors should I take into consideration?
• If I do purchase in cash, what's a reasonable discount? $5k - $10k?
• If I do purchase in cash, should my goal be to refinance it to free up my capital?

Thanks for everyone's help and patience ahead of time.