Embarrassingly Overpaid for Rental Property. How to Renegotiate?

Question

Ok, so I have been stewing on this for months. I have listened to all the podcasts, read all the books, go to reia's etc....... I'll probably do great on my first property.......then I buy a property for 200K that is maybe worth 100k. Guy I know says thats what he thinks their worth (don't blame him) and will owner finance to me. Six houses, one rented, one almost rent ready, 4 need total rehab. I'm getting bled dry. Thought I could make it work. Have not opened up a talked about this because of the shame, but this is my first step. I need to approach this guy (my friends parent) and renegotiate. I have paid on them for a year. Tried to sell but get low ball offers from 60-120K.  Thoughts

Nathan Gesner · Answer

Tell them you will pay "appraised value" then hire a formal appraisal. If the appraisal says  $120 then you offer to pay that or walk away. I understand it's for their retirement but it's not your job to fund them. Pay what it's worth or get out from under it before it sinks you.

David Oxandale · Answer

Thought I would throw an update out there. I can tell I was feeling down on my luck from my last post. After reading forums, listening to podcasts, reading books etc you think your going to knock every real estate deal out of the park. Anyways, I was listening to a podcast and it was talking about owner financing. Don't know why it clicked this time, I had heard the concept 1,000 times before. I connected with a Real Estate attorney, had him write me up a contract, posted on facebook & craigslist and the phone would not stop ringing. Turns out I'm in the perfect market for this type of product and everything is coming together. I'm getting 3-7K down and making $100 per month per property. Not a lot of cash flow but I was in the deal heavy so I'm happy with it.

Thanks again everyone for your help!

David Oxandale · Answer

200k for all six houses. Probably should be near 100 according to top selling agent and less according to offers from investors.

Megan- I working myself up to have that conversation. I have the cma from realtor I will send. I honestly just don't want them to think I'm trying to pull one over on them. They use this $ for retirement so I'm sure it will cause a stink.....

Megan Phillips · Answer

Good on your for asking about something that was potentially a huge financial mistake. BP is definitely the place to gain some insight.

Could you potentially get some comps from a few agents for the buildings and renegotiate off of that? Maybe an honest conversation is enough, I'm assuming they don't think they're hosing you. Perhaps they were just off of the mark and don't really know fair market value either.

Mike Cumbie · Answer

Are there 6 houses at 200K each or 200K for 6 houses?

Jill F. · Answer

What does your contract say about default? How much are you actually out of pocket?

Embarrassingly Overpaid for Rental Property. How to Renegotiate?

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