Investor · Commerce Township, MI · Member since 2008 · 98 posts · 10 votes
Hello,
I am a newer investor. I am looking at buying this small house in my hometown. It is an 800 sqft, 2 bedroom, 1 bath ranch, The house was listed in July for 77k its now at 19k. The non homstead taxes are around 1500. I would say it will need minor repairs maybe a couple grand into it. Its located in one of the best school districts in the area, which is a very nice area. I figure i can get around 600-650 a month for it. My question is, what should my starting offer be? I am thinking around 10k. What do you guys think?
Investor · Commerce Township, MI · Member since 2008 · 98 posts · 10 votes
17y
UPDATE: Well I made my offer last night for 11k, I was looking forward to seeing what/if the bank would counter, however today I found out from my agent that another offer went in last night as well. I am now kicking myself for offering so low. I have to imagine the other investor offered much closer to the asking price than I did. This house, in my opinion is priced well, I was hoping be the only offer and have the bank counter around 16-17k. I was trying to make a good deal a greater deal, but looks like i may lose out on it now. I will find out within the next week what happens. This was the wrong property to low ball, or maybe i am just jumping to conclusions, i'll have to wait and see. Live and learn i guess!
Also, if there are two offers submitted to the bank, have you ever heard of the bank countering both offers?
Investor · Commerce Township, MI · Member since 2008 · 98 posts · 10 votes
17y
Well I just got the answer to my question and it is a yes....the bank came back and told me and the other investor to submit our best offers....so my initial offer was in fact pretty good considering the other investor offered around the same price.
Real Estate Investor · Charlotte, NC · Member since 2008 · 368 posts · 42 votes
17y
What area in Detroit is this property located?
You should go in and offer 15k or if you know it needs minimum work what would be the problem of going in close to full price.
Full price in this market is FANTASTIC. Plenty of money to be made. If you want the deal and know that it is a deal then pull the trigger. Stop trying to get a ALREADY GREAT DEAL lower.
You will be able to CASH FLOW more than most investors in any market. If you do not want the deal please send it my way and me and my investors will get it done.
We are already up there buying TONS of property. Many are complaining trying to figure out which way to go, well we have figured it out and we are going DO NORTH.
Investor · Sarasota, FL · Member since 2008 · 17k+ posts · 17k+ votes
17y
Originally posted by Nick G:
Well I just got the answer to my question and it is a yes....the bank came back and told me and the other investor to submit our best offers....so my initial offer was in fact pretty good considering the other investor offered around the same price.
Just because the bank asked for "best and final" offers from you and the other investor, that doesn't mean that your original offers were comparable. You may have asked $11K and he may have asked $17K...the best still might come back and request each of your highest offers in the hopes that one (or both) of you will go higher than the highest original asking.
Rental Property Investor · Mercer Island, WA · Member since 2008 · 22k+ posts · 14k+ votes
17y
This is a numbers game.
First, figure out what the property is worth to you and stop there. Don't convince yourself "I'm offering $11K because that's what the analysis tells me. But, they want $13K and that's only $2K more." That's 18% more, not just 2K. If the analysis tells you $11K, don't be caught up in the bidding war and overpay. That's exactly what they want when they start the "highest and best" BS.
Second, make lots of offers. I know its tempting to fall in love with a house and really work on getting it. That will cost you money. Make 10 offers and be happy with any one of them. Especially with REOs, getting attached to any specific house is a recipe for heartbreak.
Investor · Commerce Township, MI · Member since 2008 · 98 posts · 10 votes
17y
Yes I ended up coming back with an offer of 15,500 on it. I should find out the banks decision today. That figure is still under the amount I would pay according to my analysis. I will keep you updated on what happens.
Yes I will start making more offers, its just I haven't seen a house in this area that cheap yet, the next closest i have seen is 50k, but yes I have been warned about not getting too attached to any specific house, and I try not to!
Investor · Commerce Township, MI · Member since 2008 · 98 posts · 10 votes
17y
Thanks guys, ya I will let you know. I know it needs a new furnace and water heater they are quite old. The past couple days I have been thinking about trying to sell it on a Land Contract and if I cant do that I will rent it. If I do go this path and try to sell on Land Contract first, should I wait on the repairs?
Rental Property Investor · Mercer Island, WA · Member since 2008 · 22k+ posts · 14k+ votes
17y
This sounds like a great rental. $17.5K all in, quick rehab, and $600/month in rent. If you have the ability, I'd hang on to it. If not, I'd but you could find an investor who's looking for more turn key properties who would take it off your hands with an ordinary loan at a nice profit.
Investor · Commerce Township, MI · Member since 2008 · 98 posts · 10 votes
17y
Thanks Jon, yes I do have the ability to hold onto it, and maybe I will. I am going to take the next couple weeks while I wait to close to figure out what I want to do. I may already have a renter lined up so I could just make the repairs and let them move in.
Investor · Commerce Township, MI · Member since 2008 · 98 posts · 10 votes
17y
Possibly, for the right price, but I think I might just want to hold, take the monthly cash flow, and let it appreciate a little more before I sell, and in the mean time save up more cash and look for another one.
Real Estate Investor · Charlotte, NC · Member since 2008 · 368 posts · 42 votes
17y
Congratulations on pulling the trigger.
Now, fix the property and rent it out. Then after about three months go to a small bank in your and and get a equity line of credit on the property and do it all over again.
This gets to be fun if you buy properties right and stop trying to flip. This is not the market for that. Right now is a buy and hold market.
Investor · Commerce Township, MI · Member since 2008 · 98 posts · 10 votes
17y
Thanks Doug.
Yeah that is my plan. Your right, I am going to just rent it out immediately. Instead of spending time trying to flip it. Take the monthly cash flow and start looking for the next project.