Hi everyone! My names is Joshua Morris and I am a new investor in the Central Virginia area. I am negotiating with the absent owner of an off-market home and we are having issues finding an agreeable purchase price. The home has not been lived in for many years and is in fairly bad shape. The main reason that we cannot agree on a purchase price is because the home owner believes that I am over-estimating the repairs needed to achieve a higher profit in the end. Even with this disconnect on the purchase price, I am still excited about the property because it will help clean up the neighborhood as well as should be profitable even with extensive repairs.
My question is: To help persuade the owner to negotiate to an agreeable price, would it be advisable to offer a percentage of the profit (above my minimum profit) to the home owner. From my prospective this could help prove to the owner that I am confident in my repair estimate but also provides upside to the owner if they turn out to be right about the repairs needed.
I am sure that I am not the first to have this idea so I am just wondering if people have been successful with this in the past or if it is not recommended. Any help/advice will be appreciated!
Perhaps try explaining to the gentleman that the asset is losing value every single day. The fact that it has not been rented out in years also causes reason for concern of the actual market. How confident are you that when repairs are made it can even be rented out?
Focus on why he has let an asset sit there and collect dust and create no revenue. Get him attached to the money that he already lost and will continue to lose.
I would not recommend contributing funds to do repairs until you get the title in your name. Otherwise you are setting yourself up to get taken advantage of. Good luck.