Rental Property Investor · Geneva, NY · Member since 2015 · 65 posts · 17 votes
I've had my eye on a certain property for a few months now, I would have to raise a little rents that are current, but ultimately I should get around 45% cash on cash return. The assessed value is around 125,000 for a 4-plex. They are asking 114,0000. I want to put an offer in at 70,000. What should my back-out acceptance value be? I value this based on the numbers I've calculated and also being that the utilities are not separated. I'm think I might just hand them the total utility bills quarterly or monthly had have the tenants reimburse me after the fact, bad idea? I was wondering your thoughts biggerpockets! This is in line with my goal of getting close to cash-flowing one property at 1,000 per month. This would be around 800 per month and I will attempt to pick another one up later in 2016. I accomplished my firsts years goal in real-estate by cash-flowing 500 per month from my portfolio. 2016 is to have a total of 1,500 per month cash-flowing in 2 years.
W Hartford, CT · Member since 2015 · 130 posts · 77 votes
10y
In 99.99% of cases, a seller won't take $70K on a $114K listing unless it's (a) seriously overpriced to market comps (b) there's something seriously deficient discovered (foundation issues). From the seller and the listing agent's view, 1-4 unit properties are valued with a market approach. So if other 4 units are selling in the $100-120K ballpark, that's your range of market value. I'm not saying you should buy it or not buy it, but that's what the listing agent knows market value to be. If they're willing to negotiate, they'll negotiate in that price range. I don't know what that range is, but I'm guessing around Geneva it's not $70K. I would look more at what market value actually is, whether your numbers work - and then make a fair offer. If the numbers don't work, make your best offer and be prepared for a "no".
If you do make a $70K offer and expect them to seriously negotiate with you after that, they won't in most cases. When a low-ball like that is lobbed, sellers may turn combative and not want to deal with your future offers period. Again I'm not saying not to, but be prepared to hear a very, very likely "no" or a more combative response.
Rental Property Investor · Geneva, NY · Member since 2015 · 65 posts · 17 votes
10y
A big reason I'm tempted to make that offer, they've stated they inherited and just don't want to take that "headache" anymore. When I saw the property earlier this year, I told them up front if I made the offer it would be a starting point not a take it or leave it option. While I agree the property value in the area are comparable with the 100-120k value. I refuse to buy unless I get it at least 10% under market value, using this I automatically again value from the purchase, even allowing me not to put down as much while til "putting 20% down"
Lender · Greater LA/Orange County area, CA · Member since 2012 · 3k+ posts · 3k+ votes
10y
If the most creative thing you can do is to offer all cash at low price point, you're not exploring enough techniques.
Learn how to offer a seller financed deal.
"Your price, my terms. You terms, my price"
Strongly suggest you focus on cash flow and it really helps to make certain the broker commissions are paid to lubricate and motivate all parties concerned.
Curious to know if you ended up making the offer, and what ended up happening if you did?
So, My agent posed the question to their agent, I got them down from 114,000 to about 95,000. In all likelihood, if I'm able to be patient I think I can get to to 85k or 90k. Not bad in my opinion. I should be able to put the offer in a few weeks as soon as I can sure up all my financing.