Please give me your thoughts on the following question:
I'm looking for some thoughts about an possible acquisition.
I’m looking at a value-add deal that has some deferred maintenance, cosmetic & cap ex items. From the original purchase price there might be an $75k reduction price with the offer price to the buyer. The seller is saying at that reduction it will most likely be somewhat of an as-is deal. The sellers have a very small margin from a profit prospective (to include closing, mortgage payoff, prior utility bills, etc) & the $75k discount would be their max of what they could do. It’s an C class property.
What would you do?
Please include thoughts on tax benefits,advantages of buying at a higher price point vs a lower price point & getting a no credits, etc
BTW…There are some expected cap ex items needed such as a roof (either now or within the year, some cosmetic work estimated (25k+ worth), renovating down apt that's partially demo & two vacant apt to turnover. I also plan to refi in a year or so; also expect to boost the NOI from the purchased NOI:
1. keep it as is with the $75k reduction & take out a construction loan for the work needed?
2. offer a little higher than the offer price and receive a $25k credit, an $50k reduction in purchase price & take out a construction loan for the work needed?
3. offer a full price offer. Loose the 75k in reduction in purchase price, receive potentially an 75k credit & take out a construction loan for the work needed?
4. Or what would you do?
Thanks for your suggestions/thoughts, etc in advance,