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Shannon Webb
  • Professional
  • Statesboro, GA
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Stuck inside my own head! Need help getting these thoughts out!

Shannon Webb
  • Professional
  • Statesboro, GA
Posted Mar 31 2015, 13:42

So, today I went to go and take a look at some properties today, 8 in total, all from the same seller. This guy is an older gentleman and is looking to get out of owning properties. He expressed how he want to spend the rest of his time here on this earth with his family and I totally understand.

Of the 8 properties, 2 were houses, and the other 6 were condos. The houses were in great shape. He could rent either one of them out today, he just prefers not to. (his rent was 950-1000) My contractor and saw improvements that should be made to take both homes to their top potential and get the maximum ARV. Together (for both houses), the total rehabbing would be 23,000. this includes roofing, painting, pressure washing, electrical, floors, bathroom re-vamps, landscaping, ceiling work, doors, fixtures. the 9! Not a lot of work NEEDS to be done, but for top dollar, it should be.

The other 6 condos are in good condition too, and most of the units have active tenants in them. The seller says he NETs 30,000/yr just from these properties. Once again not a lot of work needs to be done, but should be.

With that being said, he is a Buy and hold investor and I know what he brought the properties for. I also understand that he would want to make a profit off of what he has placed into the properties. HOWEVER you would think that because I am coming to him as an investor myself, that he would offer me a price CLOSE to an investors deal.... 

he wants.... DUN DA DA DUN.... *drum roll*

500k for the lot of all 8!

Here is where my brain is doing circles:

I've looked up the suggested Value (not the value that the house is taxed at) according to the tax assessors office and each house is at 89,900, give or take a little. And the condos are at 29,500 each. All in all that is 356,800! Don't get me wrong, once the improvements are made to the houses we believe we can get 125,000 for both houses. There are no improvements to be made that will add enough value to where purchasing it at 300k makes any sense.

So Now I'm down to what I am willing to offer the seller. I would love to say 70% of 356,800 which will be 249,760, which WE ALL KNOW that wont fly. But what would be my negotiating points so that the seller understands my position and doesn't feel I am trying to take advantage of him?

Also I'm trying to understand if the buy and hold model for investors uses a different formula than if I was to flip the houses. such as if I buy at 300,000 and the net income is 30,000 a year, does the 10% a year against the purchase price solidify the deal?

Please help me!

Your newest wholesaler, 

Shannon Webb

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