How are you making offers?

Question

Hi everyone...

So I've been looking through different websites searching for multi-family properties and practicing to analyzing them using the BP rental calculator and every calculation I've done is nothing close to a deal. And Im sure that is why they are still available. i've also notice many are priced with the pro forma NOI.

Should the offer be based on the raw numbers? will they even consider the offer? sometimes base on the Actual NOI the property is worth half of its asking price.

Any insight will be greatly appreciated.

David Silva · Answer

Makes a lot of sense. Since i want to be for cash flow i might just have to move my search more to the midwest or other markets.

Thanks

Matt K. · Answer

Appreciation, factor that in and it could make sense. If you 1031 from a property that had lot of equity you could jump into something bigger.... then see even more appreciation.  Even if you were to break even/lose a tiny amount in theory the appreciation or long term networth could be worth it.There's a million reasons/ways to make a deal work outside of a standard pro forma or some BP calculator, but many of them won't apply to anyone outside of the specific person doing the deal.

David Silva · Answer

Yeah i agree with you. Theirs is probably less than 1% in these markets that can actually be a home run deal. Im just wandering what investors in these markets are doing? what are the numbers that make sense to them and it's worth their while.

Matt K. · Answer

The generic calculators/formulas won't apply. It's extremely unlikely you'll see anything that fits the 1/2% rule or 50% rule. You're also unlikely to see anything at much of a discount so if you're looking for something at 70% off list, it's doubtful it'll happen.Lot of these rules/calculators apply to areas like the midwest, not coastal/major metros.

David Silva · Answer

@Matt K. around my area, Los Angeles County and Kern county

Matt K. · Answer

Where are you looking for "deals"?