How to agree on a price on multiple duplexes

Question

I need help negotiating a package of 15 duplexes. I already own several duplexes that I bought one at a time.

The deal is for 30 duplexes with an average rent of $1062.50 a month.

These appear to be in good shape and are rented at an appropriate price point.  I know the market well and understand duplexes very well, but I have never purchased more than 1 property at a time.

The seller is asking about $2.2 million. Which is a fair price if we were to break them up and sell them individually.

If you compare this to the 2% rule - he is asking 1.4% in rent per month.  I would be much happier to get closer to 2%. 1.67% would be my highest offer or about $1.85 million.

Help me structure a logical argument as to why he should accept $1.85 million or a lower price point instead of $2.2 million.

I don't have the P&L statement at this point.  96% are currently occupied.

Thank you,

Toben

How do I determine a fair price on the entire package.

Toben B. · Answer

All are located in the same neighborhood.

Broker tells me the owner is out of state and is tired of trying to manage them from afar.

Joel Owens · Answer

The numbers have to be verified before any meaningful discussions can happen.

You can spend all this time to find out their numbers are wrong and they are not motivated. First question I usually ask is WHY are you selling?? I am looking for them to over talk themselves and give away information by mistake they were not planning to say. Sometimes the mouth moves faster than the brain.

Then based on what they say and follow up questions see if there is an opportunity to be taken advantage of. It might not just be price but terms. Are all these duplexes located close together?? If not then you will have economies of scale issues.