Making an offer on a multifamily in the Bronx
Looking to put an offer in on a multifamily unit in the Bronx. Supposedly there are other offers. The asking price seems similar to other asking prices in the area, however recent sales from 2016 and 2017 do not support the asking price (the sales prices from 2016-2017 are 100,000 - 150,000 less. How low is too low for an offer on a house in the current market? Is there a better site than Zillow to check for recent sales?
@Michael M. Is this on the MLS? Are you working with an agent? An agent would be your best resource for comps. Who cares about offering too low, find a number that makes sense for you and offer that.
@Michael M. You should definitely do your own valuation based on the income you think the property can generate and build an offer around that. The @BiggerPockets .com rental property calculator is SUPER helpful for this. I use it all the time myself. Remember, asking price shouldn't be your limiting factor in making an offer. Don't feel embarrassed to make a reasonable offer based on your own valuation.
Apart from the rental income potential, you should consider if the place needs any work/renovations/repairs/etc. This will impact your offer as well. Good luck!
Sal
Originally posted by @Michael M.:
Looking to put an offer in on a multifamily unit in the Bronx. Supposedly there are other offers. The asking price seems similar to other asking prices in the area, however recent sales from 2016 and 2017 do not support the asking price (the sales prices from 2016-2017 are 100,000 - 150,000 less. How low is too low for an offer on a house in the current market? Is there a better site than Zillow to check for recent sales?
I see people making this analytical error all the time on this site: asking what they should pay for an asset "in this market," as if the only thing that matters is buying an asset, regardless of where we are in the cycle or whether they will make money at that price.
Real estate does NOT always appreciate, not even in New York. There was a major crash here in the 1980s and during the Great Recession, prices went down. (I know this from experience. In 2008, I purchased a 2BR/1Ba apartment to live in. Six months later, I could have purchased a 3BR/2Ba in the same building for $60,000 less than I paid for mine.)
You must learn the market and do fundamental analysis. Is the property actually in the path of gentrification? Is it near mass transit? Is it putting positive cash flow in your pocket after all expenses? Can you raise the rents above what they are now? How much capital must you put into the property to make it rentable and achieve the rents you want? Given that this is New York, are you even allowed to raise the rents, or is the property rent-controlled
If you can't answer these questions, you are getting ahead of yourself and shouldn't be buying the property.
Are you working with a Realtor?
Multi-families in the Bronx are extremely competitive in this market. Unfortunately it is not uncommon to find properties that are selling for almost 100k more than what they sold for in 2016. The comps that determine today's value are ones that have sold in the last 90 days. You also must consider how are you purchasing? Are you using FHA? Conventional? A rehab loan? Cash would be the best tool to get a deal. The lower DP you have the less likely you are to get a tremendous deal. Cash or access to allows you to purchase problematic properties with disgruntled tenants, extensive renovations needed, violations, title issues, etc... those make the best deals in this market. Everyone else is paying market value or close to.
