Hey BP fam, I’m working on get my first deal and this is what I’ve run into. Is 65% x arv - repairs, a good estimate to value a a multifamily rental property ? I got a call from a motivated seller/ seasoned landlord he has multiple properties with 100% equity. He asked for an offer right off the bat. He said go check out the property and give him a price. So i go check out the property next day . The property was a 4plex and built in the 1920s, and I didnt go inside but just from the outside it was a rough property so i gave him a range on what my offer would be depending on repairs. I estimated a full gut to be safe. I did the (65%x arv - repairs) formula and he was pissed. He said I need to learn how to value properties better or I’m not going to get a deal from anyone. So I’m just wondering if Im takIng the rIght approach on preparing my offer price. is 65% too low , am I over budgeting in repairs, or was my offer fair? I’m not flipping or wholesaling. Just trying to get a rental property using the BRRR strategy.

HI @Daniela Craig Find out why the property is for sale so that the offer answers to the Seller's needs. What are you going to do with the property? Flip or hold? ARV does not matter if you are going to keep it for a while.

Your approach lacked facts.  Maybe it did not need a full gut, maybe it did.  Ask for a tour of at least one of the apartments and the basement. Ask about the age of the roof and systems (water heaters and furnaces). Ask about the leases in place. Maybe you will be able to upgrade to current market rents, or maybe it would be too costly because of deferred maintenance. Base your offer on what the building is worth to you and how you can help the Seller with their problem (the 'why' it is for sale).