Motivated seller. Offer help
Hi,
So I have a deal that I am looking for some guidance on. Duplex (1st floor retail, 2nd floor 2/1 apartment). Seller is putting off the vibes that they just want to get rid of the property but aren’t going to give it away. Current list price is $400k. Needs approx $30k in rehab. If total Projected rents are $2700/mnth. Taxes $3600/yr. What would you offer if you wanted it to cash flow with a standard down payment? Numbers don’t work without low balling but figured I would ask the BP crowd to see if I am missing something. Any owner financing ideas to make it cash flow?
I'd use the BP calculator & it should tell you based on your comfort levels. It's hard to give you a specific number because everyones risk profile is different. Good luck!
#1 Legal & Legislation Contributor
- Rental Property Investor
- Hanover Twp, PA
- 2,452
- Votes |
- 2,359
- Posts
#1 Legal & Legislation Contributor
- Rental Property Investor
- Hanover Twp, PA
@Steve Wolfrey, is this listed with an agent or are you dealing directly with the seller? What makes you think the seller is motivated?
If the seller is motivated and just wants out ask what they owe and offer to do a "Subject To" deal if the amount makes sense and especially if the rate is good. Even if they owe MORE than you want to pay, if you do a "Subject To" deal with the lower rate on the existing loan the payment might be the same or cheaper than you would get with a new loan at the price you are willing to pay.
Other than that I would find out in what ways the seller is motivated. That could bring up new avenues to bring a deal together.
I know the seller is motivated because they were present and leading the property tour. I guess what I am asking is based on the few numbers I provided what would people offer for it to make sense to them. I apologize for this being an unanswerable question.
#4 All Forums Contributor
- Plymouth, MI
Quote from @Steve Wolfrey:...except you're missing the most important number. How much does the seller still owe on the property?
I know the seller is motivated because they were present and leading the property tour. I guess what I am asking is based on the few numbers I provided what would people offer for it to make sense to them. I apologize for this being an unanswerable question.
#2 General Landlording & Rental Properties Contributor
- Real Estate Consultant
- Cleveland
- 3,028
- Votes |
- 5,171
- Posts
#2 General Landlording & Rental Properties Contributor
- Real Estate Consultant
- Cleveland
Quote from @Steve Wolfrey:
Hi,
So I have a deal that I am looking for some guidance on. Duplex (1st floor retail, 2nd floor 2/1 apartment). Seller is putting off the vibes that they just want to get rid of the property but aren’t going to give it away. Current list price is $400k. Needs approx $30k in rehab. If total Projected rents are $2700/mnth. Taxes $3600/yr. What would you offer if you wanted it to cash flow with a standard down payment? Numbers don’t work without low balling but figured I would ask the BP crowd to see if I am missing something. Any owner financing ideas to make it cash flow?
I would not pay more then 2000k, all in 230kish NET rent about 19k net , so about 10% net cap based on cash purchase So this is WAY overpriced IMO, I would not touch it.
There are much better deals out of state. I am going to close on a duplex, ALL IN 95K, 20k rent, taxes 1500, about 13k NET so about 12% NET cap.
All the best
Thank you! That’s what I was thinking. What state, if you don’t mind me asking, are you buying the duplex? Thanks again!
#3 BRRRR - Buy, Rehab, Rent, Refinance, Repeat Contributor
- Investor
- Austin, TX
- 5,507
- Votes |
- 9,861
- Posts
#3 BRRRR - Buy, Rehab, Rent, Refinance, Repeat Contributor
- Investor
- Austin, TX
Whats ARV on it? ARV*.7-30k = Purchase price.
@Steve Wolfrey don’t worry about what offer makes sense to them. Worry about what makes sense for you and then try to explain it to them.
The owner giving the tour doesn’t make him motivated. Maybe he can’t find a good realtor because he is unrealistic in his asking price?
Next time you talk with an owner ask lots of questions to try to uncover their real motivation- are they looking for a big chunk of money for a new investment? Are they looking for a steady stream of income? Are they complaining about capital gains? And even more important as Joe said, you need to find out how much they owe so you can make a seller finance offer.
Quote from @Steve Wolfrey:
A property is worth what you are willing to pay for it. To make this property cashflow, you would have to buy it for under $300,000. Next!
