Creative strategists' minds help needed on making an offer

5 Replies

HI  BP friends! 

I read in a recent article posted by @Andrew Syrios titled 13 Proactive Ways to Increase Rent & Add Value to Your Rental Property. One of the strategies mentioned is to offer 2-3 choices to tenants so they compare the choices rather than comparing your rental to others in the area. (Andrew Syrios article)

I want to apply this strategy to making an offer to a seller I am meeting tomorrow afternoon. I am meeting a seller of a MF building tomorrow that is NOT listed on MLS…yet. The seller is sort of stuck on his asking price and would like to see if he can save realtor commissions by not going on market. He is not open to seller financing. I wanted to offer him 2-3 choices rather than just offering him a purchase price. Any ideas on some creative financing or creative choices i can offer to get the building before it goes on the market?

A little background. its a 4 unit building, rents are at market already. Building does not have parking spaces in the back (as majority of the buildings in the area do) so i would need to add that once i get it, units are a bit outdated, roof needs to be replaced in the next 1-3 years, tuck pointing may be needed in the next 3 years. I will be getting an FHA loan on the property but would love to seller finance it but i do not think he is open to that.

I was thinking maybe offering one choice at the price i want with my FHA financing and then another offer that is higher with seller financing? Any creativity that you guys can come up with would be great!!

@Andrew Syriosundefined

@Siraj Ahmed

Commissions and financing choices have nothing to do with the price you offer...

He doesn’t want to do seller financing. Not much you can do about that.

In general, the type of financing a buyer wants to use has nothing to do with a seller’s price.

You can’t use an FHA loan if the place is fully rented since you would need to occupy the property. You might also have a problem due to the condition of the roof.

At the end of the day, offer the price that works for you. Sellers want to net a certain number.

Promotion
Ashcroft Capital
A national multifamily investment firm
Three Reasons Investors May Prefer Real Estate
Read three reasons why investing in real estate private placements may provide several advantages.
Read More Here

@Siraj Ahmed Unless I am missing something, why would you want to buy this property if there is little to no upside potential (increasing income OR reducing expenses)?

Furthermore, FHA is not your only option. Assuming you have a decent job and reasonable credit score, you should definitely be able to secure better terms through regular conventional financing. The market is very competitive nowadays (I am not a lender).

Originally posted by @Omar Khan :

@Siraj Ahmed Unless I am missing something, why would you want to buy this property if there is little to no upside potential (increasing income OR reducing expenses)?

Furthermore, FHA is not your only option. Assuming you have a decent job and reasonable credit score, you should definitely be able to secure better terms through regular conventional financing. The market is very competitive nowadays (I am not a lender).

I am getting it under market value (that is the upside) and looking to build equity through an FHA low money down loan. Instead of conventional financing. Plan is to refinance in some time and take some cash out to get the next property.

@Siraj Ahmed Hope you've calculated how much upside you have vs. how much expenses you will be putting in. Anyways, have you talked to local mortgage brokers in your community? You might be able to get a cheaper loan than just FHA type loans (biggest impediment to FHA loan is that mortgage insurance never goes off). Refinance costs money and will eat into your profits. It's not a simple manner of moving money from one account to another.