Chicagoland Northwest suburbs · Member since 2019 · 6 posts · 1 vote
Good morning-I'm new to bigger pockets forum, I'm been listening for a few months. I have three doors and am looking at a deal right now for a turn key four unit. It's in what I believe would be a C area and all 4 units are section 8 at 1000k each. They are asking 340k which is over the market. I'm considering putting in an offer around 250 up to 270. Operating-is 5k taxes and 3600 in gas, water & refuge. I would use a DSR loan with 20%down. I know this isn't-a BRRR but the cash flow is good. I'd appreciate any insight pros and cons.-thanks in advance
@Jennifer Velazquez 100+ days on market, there's a red flag somewhere then. The property is damaged beyond reasonable repair (although you said it's turnkey), the tenant's have not been paying rent at all, the rents aren't actually set at $1,000 per unit, the area is too undesirable even for investors to handle, etc. Your real estate agent should have provided more insight about the area and deal overall.
@Jennifer Velazquez why is the listing above market value? Are you using recently sold comps to verfiy? If each unit is renting for $1,000 a month and the seller is asking 340k, you're getting a deal that is above the 1% rule which is extremely rare in today's market. Was the property just listed? Submitting an offer 90k below asking is a pretty big insult and waste of time for the seller. If you do move forward with an offer, I would include a stipulation adressing for all leases and rent rolls to be provided during due diligence. Hope this help!
All the comps are recent and exact building there are blocks of these quads in this area. We asked the other realtor to provide the comps he used for this listing and he didn’t respond to that question in the email (my realtor asked a few questions). It has been on the market 100+days too. I loved the numbers for this but had reservations on what to offer because they are asking so much more than the comps. The realtor did say they had another offer last night too. I just wanted some other insight on it beings C area and other sets of eyes reviewing. I did think this was a great cash flow and checked all the boxes. Would you suggest offering above what all the comps are at because of the cash flow? thank you for your input
@Jennifer Velazquez 100+ days on market, there's a red flag somewhere then. The property is damaged beyond reasonable repair (although you said it's turnkey), the tenant's have not been paying rent at all, the rents aren't actually set at $1,000 per unit, the area is too undesirable even for investors to handle, etc. Your real estate agent should have provided more insight about the area and deal overall.
@Jennifer Velazquez "It has been on the market 100+days" - Bummer I was excited about this post. If it's been on market for that long it's a big red flag. Properties matching or beating the 1% rule sell in hours, not days in this market. You can offer anything you want (its a free market) but it sounds like the seller isn't motivated.
Don't invest too much of your time on this property.
It’s fully occupied with leases and section 8. It looks like it was bought by somebody flipping it for a low price of 158k it is completely rehabbed all units, roof and boiler. I’m familiar with the area. there is a small grocery down the block, churches, schools and busses. It has a downtown area that is decent it is just a poorer area. I had alerts up and don’t see these listings ever come up. I’m digging in deeper with my realtor today. We also have a viewing I only dare the outside and all the renovated unit pics.
If it is over market price, this is probably why it has been on the market. The biggest red flag is the realtor is not justifying the high offer. The other post I agree with is maybe the rents are not 1000 per unit. I had my realtor forward me a potential deal that I was told rented for 1100. After I did some research, that was the median rent for the area not the rental for the unit she was showing me. The rent was more like $700 per month which the unit barely cash flowed. I passed. I would look to get proof of rent like rent roles or ledger or something to show that rent. Also, I wouldnt offer the offer price. I would go with the market. Once you confirm it does indeed rent for 1000 per unit, formulate your offer based on market. You could start a little low and see if they counter, The person that did the rehab could have overpaid or over updated. Trying to force a deal and find a sucker.
Without the rent verified and without getting it for a reasonable price I would pass.
Thank you-The realtor came back with a new rent amount, even higher. I've been looking at rents in the area and the appropriate range is from 750-900 not 1000 for these units. Also, she just said the rents are going up. I asked my realtor to verify rent because it didn't sound right, and she stated higher than reflected in the listing. I think if I can get the right market value for this and estimate rents correctly, then this can still work. I'll definitely have to do so more digging. I appreciate the suggestions on things to look at.
This explains why it is priced too high. They are pricing on rents they think are going up. if it is renting at 900 why not use that for now. If they think it is 1000. Then pricing at 340k is reasonable to them. Doesn't sound like they are using comps or current rents to sell this property. Thus on the market for 100+ days.
Yep, that's what it seems like, we just spoke with them and were told actual 2@900, 2@950 and they were estimating all 4 going to 1000 which is overpriced. I'm interested to see the units and do a little more digging.