Counter Offer on Quadraplex

[Shelly Cavin]

I need help analyzing an offer on a quadraplex in small town 30 miles northwest of downtown Fort Worth and 38 miles from DFW airport. It’s an off-market property that a local custom home builder built. He is asking $393,000 for a property that was built in 2013. It’s 100% occupied. The property needs no repairs or upgrades.

I am concerned that there’s not much room to increase rents and not room for appreciation.

What would be a good counter offer?

Asking Price $393,000

Monthly Rent $3,600

NOI $32,194

COC ROI 11.2%

CAP Rate 7.9%

[Tyler Kastelberg]

@Shelly Cavin

Shelly: "Good" is quite relative in this situation. Can you pull comparable sales in the area to see the cap rate at which other buildings sell? If the cap rate is 10% on most other sales, you'll have a good argument for the seller to reduce their price.

Best of luck!