First Property - Offer countered

11 Replies

Hello ,

I submitted my first couple offers last week and one received a counter offer for a duplex in Atlanta. The property was initially listed a month ago for 10k less and the price increased a month later to 125k. I submitted an offer at the original asking price of $115k and the seller countered at $120k. The upstairs unit is currently rented and the downstairs is currently vacant, both units fully occupied should come in at a minimum of $1,250. The vacant unit will need a light/med rehab to get it rent ready. 

I should also add that i accepted the counter offer but on second thought was thinking maybe i should have countered back with my original offer of $115k, due diligence is 8 days.

 The current plan is to hold and rent. Comps in the area of recently sold prop are around 120k -130k. I am guessing the seller had increased the price to factor in some of the repairs that will be needed.  

Can anyone please share any thoughts or advice on what I should be doing next at this stage? Or things to consider which i may be overlooking since this is literally my first property and still building on my RE knowledge.

Thanks for the help, 

Amaju

What did you base your original offer on?  

Why did you accept the seller's counter of $120k?

I don't really care what the rents are, since you don't get to keep it all.  What matters is the cash flow...so, what's the cash flow based on your original $115k offer?

How are you paying for this?  All cash or financed?

@Joe Villeneuve

I had based the original offer on the estimate cost of repair. 

I accepted the offer bc my agent had advised to tie the property up first and since we know work is needed, once the inspection is ordered, i can come back and offer a lower number based on the repairs needed. What are your thoughts on this?

After the mortgage payment, there will be an estimated $600 or so before other prop expenses. 

I will be financing the prop. 

Please let me know your thoughts.


Thanks!

"I had based the original offer on the estimate cost of repair."
What does this mean relating to my question?

"After the mortgage payment, there will be an estimated $600 or so before other prop expenses".

So, back to my original question, "what will the cash flow be with and without the financing?"

What’s the expected cash in cash return?

What’s the cash flow?

What’s the monthly rent currently? What’s the expected rents after repairing the issues? 

Can you add a bedroom to instead rents?

What’s your long term play for this property?


You are asking the wrong questions...

    Did run the numbers for this?  use rentometer?  

Account Closed

The expected cash on cash is 12%

The cash flow is roughly $250

The monthly rent is $1200. After repairs the prop could rent for $2k.

I doubt ill be able to add a bedroom. 

My long term play is to hold for at least 3-5 years

I ran the numbers as best i could and used rentometer to get a sense on what the prop could rent for after repairs. The current rent at $1200 is lower that what rentometer estimates in the area, which is $2k combined for both units

You can always see what the inspector comes up with in his report. Perhaps you can get more aggressive on repair credits/seller repairs.

@Amaju E. from what you’ve said, it sounds like a decent find. Get an inspector in and see what else there is. Remember, $5K shouldn’t make or break a deal, especially if you’re BRRRRing. Not saying you should automatically spend it, but I wouldn’t sweat it.

Same with repairs. Be honest and don’t try and nickel and dime the seller. You know what you’re getting yourself into, some reno is needed... so focus on the big things that’ll break the budget (roof, hvac, foundation, etc).

And most of all, good luck!

Originally posted by @Amaju E. :

Account Closed

The expected cash on cash is 12%

The cash flow is roughly $250

The monthly rent is $1200. After repairs the prop could rent for $2k.

I doubt ill be able to add a bedroom. 

My long term play is to hold for at least 3-5 years

I ran the numbers as best i could and used rentometer to get a sense on what the prop could rent for after repairs. The current rent at $1200 is lower that what rentometer estimates in the area, which is $2k combined for both units

What are you basing your Rent O Meter rent on?

@Mike McCarthy

Thanks for the advice. You are right, i shouldn't sweat the 5k and will wait for the inspection to come back and make sure the property is structurally sound and no major repairs needed. My agent has coordinated an inspector to come out to the property tomorrow.