So I'm negotiating with a seller right now & thought I would put my question out here to see what other people thought. I am trying to buy a 4 plex & the owner has come off the selling price by only 5k. I am sitting at about a 6% cap rate with the deal sitting this way. I will have to pay a 9k sewer assessment with things the way they are at the moment. I've asked the seller to split that with me...but he came back & said no...but he will pay for a home warranty ($1500 roughly). Would you let the deal sit & wait or would you just do the deal? I hate to loose the deal over 5k... but Ideally I want at least a 7% cap rate... of course that is not a hard fast number it's just what I set out to get. FYI...this is my first deal.
All opinions are greatly appreciated!
@Steve Triano What is the sewer assessment? Is there something wrong there?
No I guess most properties in the area have a sewer assessment...some just pay for it monthly....some negotiate it into the deal. Because it's 9k I kind of want to get it handled up front.
Are you purchasing this cash? What are your metric goals? Your claims of 6 & 7% sound like rough numbers. Can you tell us what the exact financial impact of an additional 5k added to the purchase price? I think this way we can actually much better assist you.
I'm not purchasing cash...I'm putting 25% down... it's a 220k mortgage...with about 2100 in monthly rent.... I have a 10% management fee... 5% vacancy, 2000 Property tax (/year), 1000 Insurance (/year) 1000 maintenance(/year), Other Costs (2800 - with the sewer.... 1400 without) I show 6.88 cap rate with the sewer.
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