Is this deal worthwhile?
7 unit apartment building in a very desirable area right next to university. The property is 100 years old. New roof. Windows have been replaced. The building is in working condition but lots of small repairs needed, all units are tenant occupied. Heating is for whole property. Right now owner pay for heating cost but if I buy it I will divide cost and have tenants pay their share.Kitchen and bathroom are functioning but old. Some toilets are loose. Outside brick wall need to be re-pointed which would cost around $50k. Electric are fused based and need to be upgraded at some time, which will cost $17k.
Total year rent: $77,040
Property Management 8% $6,163
Vacancy 5% $3,852
Taxes & Rental $12,676
Insurance $4,256
Repairs Residential $3,500 (actual, according to seller)
LL Electric and Gas(Common) $7,308 (mainly heating, which I hope to have tenants pay)
LL water $1,878
CAPEX set aside $4,800
Other expense $1,500 (actual)
NET OPERATING INCOME $31,107
Price $640,000
Capped rate 4.91%
FINANCING
Cash From Buyer 25.00% $160,000
First Mortgage $480,000
Closing Cost estimate $20,000