Newbie question on making offers

6 Replies

Hey guys,

I'm gearing up for my first deal and had a question regarding when you actually make offers/do the final analysis on a property when touring:

I know you set up a time to walk the property with your motivated sellers and that you should go into the property already having done an analysis. 

However, once you physically tour the property, do you estimate repairs and make offers on the spot in-person? It'd be hard for me to feel confident in an offer as a newbie without going back to the spreadsheets, but I would imagine that it's important to negotiate in-person.

Any tips on how to be as prepared as possible to make an offer would be great!

@Armand Farr okh After over 50 deals in I never make an offer on the spot.  I simply tell the seller that "I need to go back and do my research and crunch some numbers so that I can make the best offer possible and I will get back to them within 24 hours."

@Armand Farrokh

My business partner @Cerue Diggs and I followed these steps:

  • 1. Find a real estate agent who is willing to send us listings from the MLS (ours was a Facebook friend I had known for many years).
  • 2. Meet potential buyers to find out what kind of properties they are interested in buying, so you know choose which properties to visit.
  • 3. Originally, we were visiting properties before doing calculations on them, but later, we found that it is far better to schedule visits after doing calculations.   IN FACT, THE CALCULATIONS HELP US CHOOSE WHICH PROPERTIES TO VISIT!
  • For instance, if we are interested in two houses, in different neighborhoods, each going for $100,000, when we do calculations on them, one might have an ARV of $250,000 and the other might be only $75,000. Wouldn't that kind of advance preparation help you choose which one to visit and save you a lot of time?
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Honestly I believe having your material with you can help with the sale. I print out numbers outlining returns, costs, and initial investment every time I go into an investment property. That way you are able to even show them. You simply state this is the return I have to make for this property to be worth it to me, here are the repairs that must be done, and this is what I can offer you. If they accept that's wonderful. If not, walk away and don't let them try to alter your numbers. As long as everything is written out plainly they will be able to see that what you are offering is fair and you aren't lowballing them.

Originally posted by @Timothy Church :

Honestly I believe having your material with you can help with the sale. I print out numbers outlining returns, costs, and initial investment every time I go into an investment property. That way you are able to even show them. You simply state this is the return I have to make for this property to be worth it to me, here are the repairs that must be done, and this is what I can offer you. If they accept that's wonderful. If not, walk away and don't let them try to alter your numbers. As long as everything is written out plainly they will be able to see that what you are offering is fair and you aren't lowballing them.

Hey Timothy do you have a particular formula you use?

Originally posted by @Reginald Lawal :

Hey Timothy do you have a particular formula you use?

Honestly I like to use the calculators on this site. They are a go to for myself as well as the other investors I represent as a real estate agent. The nice part is I have an LLC formed for the acquisition of properties so I am able to act as a representative of a company instead of as the actual buyer. That gives me the ability to take a step back and use lines such as "I will have to speak to owner of the company about that and get back to you". Typically if you go in with set numbers people will respect that. I simply tell them by company does not allow for any acquisitions with a Cash-On-Cash return of less than 15% on rental properties. It makes it to were I am no longer the bad guy offering a low amount. I am just the messenger working for the boss (who is myself). Plus the calculators here present a wonderful visual especially when you bind them up with other material in a nice folder. Presentation is everything!