First offer was a flop! Any ideas for my next one?

[Craig Herring]

Well I put in my first offer on a 3 unit MFH this past week and it was rejected...without a counter offer...and was told my offer insulted the seller!

Although I knew it was a low ball offer and didn't expect my first offer would be accepted, I was still pretty excited pursuing my first REI deal.

The numbers are below but here are 3 things that I think I can do to improve my chances next time:

1. Don't offer an even number - to show that there is reasoning to the offer (ie. $103k instead of $100k)

2. Explain my numbers to justify how I got to my offer.

3. Include a personal letter with the offer so that the deal is more personal instead of cold or robotic.

Do you guys/gals have any other ideas to help improve my offer success in the near future?  I'd love to hear your input.

Regardless, I will keep looking for deals and hopefully land something soon!

3 Unit MFH (1-1 bed, 2-2 bed)

Asking $184,900

Current rent $1750/mo (2 units were way under rent by ~$150 ea)

Pre-inspection Est repairs $20,000 (roof, very old termite damage, possibly exterior siding)

Conventional financing w/ 20% down.

My offer $100,000

At $100,000 with current rents = CF $95/mo  COCROI 2.7%

At $100,000 with $2100/mo rent = CF $319/mo COCROI 9.1%

[JD Martin]

Thoughts:

1. I always explain my offer to my agent. We've done enough deals by now that he pretty much knows what I'm thinking anyway, but my double shot of street cred (I've closed my deals) and rationale for my offer makes it easy for him to work their agent. 

2. Skip the personalized letter unless this is your dream home and you just have to have it. You're a businessman, and this is business, not Ann Landers.

3. Congratulations on making an offer, but don't try the low-ball shotgun approach. It will just end up where no one wants to work with you. That doesn't mean you come up on a house that doesn't warrant it, just that you don't pick numbers out of thin air.