Owner carry back 5-plex-should I walk?

8 Replies

Help me understand BP!

Im looking @ a buy and hold investment but its looking a little sketchy!

5 units

one duplex 1/1's

one duplex 2/2 

one SFR 1/1

three seperate one car garages with an additional two car carport.

one lot.

Condition;

Peeling exterior paint, falling fences,no grass. The shingles appear to be in good condition however the SFR has a large sagging area in the roof. It appears mostly vacant. I have not had the opportunity to go inside but my initial estimation is that the inside will need some serious help. Just a rough guess of 20-25k rehab. if I did the work myself. overall condition in my estimation is a 5!

What the owner has said;

Asking 225k

I dont need to sell as it is all paid off

Monthly rent is $2500

4 of 5 units have long term tenates.

Willing to do owner financing for close to full asking price.

Has turned down cash offers of 150k,160k and 175k

SFR is primarily used for seasonal workers ie:oil industry/feild workers

What the neighbor has said; 

only one or two of the units stay rented out, but no one tenant stays for more than a few months.

My estimation is that if two units are rented @ $500 per unit that puts the pp @ 60k with GRM of 5. Id be willing to give a nice interest on his money for the desirable terms maybe around ten years.

BP am I missing something. Its obvious the owner isnt being honest. Is it worth my time getting creative or should I just walk?

Thanks

@Jarrod Gregory , looks like the Seller only wants to agree at a price where the interest and principal you pay will be more than the rent already being received. ie. what's in it for you?

Nothing stopping you from running your own calculations and submitting an Offer, even if it's less than what has already been rejected (if those figures are even true). You can remind the Owner - you don't need to buy!

Are you only looking for Sellers willing to carry-back, or could your (low) Offer be "cash", other-funded? The owner might then sit up and take notice? All the best...

This post has been removed.

@Brent Coombs Thank you for taking the time to read and reply. 

I'm a little unsure of how to come up with a valuation. The BP calculator is great but it seems to me like it's really aimed towards after accusation value. How might you come up with your valuation if in my shoes. Thanks again 

walk.  There is a reason others have offer less. They ran the numbers and did the checks like you and realize there is no long tenants.  Also, not sure of the place/area. but isn't the oil area heading downwards?

@Brent Coombs Thank you for taking the time to read and reply. 

I'm a little unsure of how to come up with a valuation. The BP calculator is great but it seems to me like it's really aimed towards after accusation value. How might you come up with your valuation if in my shoes. Tha

@Rich N. you make a valid point. Oil prices are currently on a down turn.   I never considered that. Thank you

Originally posted by @Jarrod Gregory :

@Brent Coombs Thank you for taking the time to read and reply. 

I'm a little unsure of how to come up with a valuation. The BP calculator is great but it seems to me like it's really aimed towards after accusation value. How might you come up with your valuation if in my shoes. Thanks again 

 Each property needs to be viewed on its own merits, and sometimes there just isn't any nearby close and recent SOLD comparables. Research is the key, which you have already started. It was a good idea, getting the neighbors to help with that. There is lots of free info around this BP site too.

Many successful real estate investors will have their maximum Offer worked out to be a certain percentage (say, 65%) of what their best research tells them a property should be worth as-is, so that they ALWAYS have plenty of wriggle-room in case their research doesn't match subsequent reality. Go get 'em...

@Jarrod Gregory

Do your own due diligence and make your own offer. You are the one who will be living with the terms. I personally believe that I make an offer on every property I see because you never know the motivation of the seller. Every property has some value to me for the right price. Never pay retail!

Medium tetra homes update 50Bill Pohl, Tetra Homes, Inc. | [email protected] | 513.988.3700 | http://www.tetrahomes.com