If the numbers work, do you negotiate?
So I'm getting ready to make an offer on a REO. Listed at $65k. It needs about $10k in repairs, ARV is $100k. I am looking at a rehab/mortgage combo at around 5% and 20% down.
Will rent for $1000-$1100
P&I - $321
Taxes - $132
Ins - $50
PM Fees - $85
20% Reserves - $200
Cash flow = $212
Annual = $2547
$15k down
CCR = 16.98%
My goal is >$200/month & >15% ROI
It's been on the market for 2 weeks. Do you risk making lower offer and having someone else show up with offers? Or since the numbers work, just offer full asking price and get it done?
Like everyone else, I always want a deal. Never give them full ask, gotta negotiate. But should I ?
Most Popular Reply
I think I could answer just about every post with two words
It depends
If you are finding plenty of deals then yes negotiate. If you are struggling to find deals that meet your criteria and things are selling above list then put in your best offer.
Personally this deal wouldn't excite me in my area so I would definitely negotiate this one.
There is an important negotiating principal. If you don't negotiate the other side may feel they could have gotten a better deal so they are less committed to making the deal happen. If a seller (or Buyer) feels they got the most out of you they could they are more committed to making the deal happen.
Good luck- Ned