How to make an offer and negotiate?

[Sejin Kim]

Hello, we are in the process of pherchasing our first property( Hopely) Seller is a bit motivated to sell and we want to do short term rental. 

when you submitting offer how do you guys calculate? We want to make sure if we can cash flow. 

what kinds of things you guys consider when you do numbers? 

Also any good tips to negotiate the price? 

thank you. 

[Alice Horn]

Quote from @Sejin Kim:

Quote from @Joe Villeneuve:

Rent minus expenses = Cash Flow.  The formula to find out what to pay for a property is this:

Rent - Expenses - CF goal = Mortgage Payment.  The mortgage payment is based on the interest rate and term.  Fill in those two numbers into any online mortgage calculator, and it will tell you what the maximum loan is.  Add that to the DP (20%), which actually means divide the maximum loan by 80%, and you have your maximum offer.

I don't negotiate. I calculate my maximum offer, and make that offer.  If it doesn't fly. I leave it with the seller, but move on.  If they come back I win, if they don't I don't lose.

Thank you so much! I really like the property and I see it's hard to get cash flow these days because of interest rate.... We are planning to do STR so that it covers mortgage and make some cash flow..

we are looking at Condos in Florida. Do you think 1 bedroom condo will be hard to sell later? 

 @Sejin Kim remember that in most Florida markets, one bedroom condos will compete directly with hotel rooms. Before you make this purchase, research daily rates and occupancy carefully on nearby similar condos (on Airbnb, Vrbo, etc.). If you see really low rates, that likely means your investment will struggle to make money, and will also be difficult to sell in the future. Feel free to reach out if you would like to discuss!