Offer on my first deal
Looking for advice on my first deal. He purchased it a year ago for $325k
Duplex listed for $396k Offered $350. He countered $373. Both units are rented with long term renters and they bring in $2450 a month. One is section 8. Wanting to counter $360. Will be a cash purchase. He is selling wanting to do a 1031 exchange. Our goal is to build a long term rental portfolio.
Any advice appreciated.
Fran…
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I don't know much about your market but I will assume there is above average appreciation based on those numbers. At $360k, you are saying there is 10% appreciation; that's pretty substantial. If you really like the unit and the area, then it's up to you. If you are looking to build a long term portfolio, why not just go in with a downpayment and let the renters cover your expenses. Math it out to find the minimum you need to put down for the rent to cover you. Then sit tight for a bit, make sure it's rented and you have reserves, then repeat the process. I suppose you can do delayed financing as well if you want to close all cash to make it a quicker transaction. But, save as much of your cash as you can for reserves and another purchase down the road.
If that appreciation is regular/normal and not an anomaly, I see the appeal here. I would still go in with as little cash as possible so I can purchase another property and multiply my returns with the same cash. This approach will help you grow your portfolio more quickly, but it's all up to you.