Is this deal worth it?

[Vince Rosario]

Background Information: So this guy is selling his duplex (he lives in one side) on the MLS that is obviously overpriced. I understand that he wants to get the most for this property, but according to comps and my cash flow analysis, it's just not worth what he's asking. The listing agent said he really needs to sell this duplex fast because he just bought four-plex, and for whatever reason, he doesn't have the time or resources to manage both at the same time. Here's more info on the situation: Property Purchased: 10/17/2012 Purchase Price: $268,000 (sold for 10/17/12) Loan Amount: $263,145 Down Payment: $4,855 (equity) List Price: $340,000 (selling price) My Offer: Offer Price: $283,000, this includes: - $268,000 his purchase price plus - $6,000 closing costs, plus - $9,000 to seller Short term capital gains tax (assuming 25% marginal tax rate): -$3,750 Cash to seller: $5,250 Return on cash (for approximately 1yr, 2mo): 108% There is no known upgrades to the property while under his ownership for about 14 months. Here's how I see it - owning this duplex for a little over a year is essentially the same as loaning $4,855 to someone, getting that money back in a little over a year, plus $5,250. I'm also assuming that his tenant didn't cause him too much headaches over this time. The property's value hasn't budged much due to ongoing foreclosures as part of the problem. There's also no comps in the area that comes even close to $300,000 ($340K he's asking). Cash flow will also be severely negative at the $300K+ range. From my understanding, he has two options: (1) continue to keep the property listed hoping someone will overpay for it, while losing money (other unit is currently vacant because he's currently moving into his four-plex) or (2) get the property out of his hands so he can focus his time and resources to his new four-plex, give him a good return on his invested cash, and giving him a quick close. Am I missing anything here? Am I off on my calculations anywhere? Is this even a good deal for him?? It appears that time is of utmost importance to the both of us. According to the seller's agent, he wants out quick while I want to lock in an interest rate quickly before it rises again. Any input will be greatly appreciated. Thanks in advance.

[David Beard]

For what it's worth, you didn't appear to pick up the realty commission he's going to pay when he sells. Make an offer somewhat below your max possiblie offer, so that you have some negotiating room. Include your letter of mortgage pre-approval. If it works, great, if not, next. You can't make him motivated. If it doesn't work now, maybe he'll take it next month or the month after that. Ask the realtor to keep your offer in mind, put it on your tickler to call back next month.