I'm going to see a property tomorrow listed by the owner. It's a 2 family home with tenants and the owner's asking 425k for it. How should I approach it, and what should I tell him?
Hi, what you are saying is very broad.
First - what are the comps? Without these you really have no idea what to offer or what the property is worth.
Second - make sure it is Zoned Multi-family.
Third- how much work does it need?
Fourth- what is its sales history. Did the owner just buy it 6 months ago? Or 5 years ago? - The sales history is something I look at just to get an idea previous purchases and prices of the home.
Fifth- why is he/she selling it? Is he hard up for money and if so this is good for you cause you get a better deal. If not than he may be harder to negotiate with.
Sixth- 1% ratio of rent to property value is what we look for here in Florida. 1% is considered prime rate. What is your rent to value ratio. This number will tell you the return that you will make on your purchase but first you need to know how much you will be all in for. Take all the cost involved and use that number.
Finally, are you holding or flipping. If you are flipping you should look at what would need to be done and the time frame on having tenants move. This time frame and possible eviction will add to your all in cost
I have tried to give you a very basic overview of what you should look at and I hope it helps. Good luck.
He owns the property. It's been in his family for over 100 yrs. The house needs a lot of work, preferably a gut rehab. I could put 50k and do a basic facelift. I didn't check zoning and all those great stuff. After I took my friend who's a contractor he told me it can cost up to 175k for a complete rehab. I called the owner and I told him what I taught and he got upset and told me it would only cost 40k to fix the whole house because he was a retired contractor. He didn't even let me make an offer. I was thinking of offering 175k
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