Newbie 101: how to buy right!?

6 Replies

Hey BP Nation, 

I'm not sure if this a nation or not already, but I've found it is a great place to find answers from the community. 

I Recently re-listened to episode 247 of the BP podcast, and walked out with a ton of motivation. That same day I went out and sent out 100 letters to distressed owners and absentee owners. This was me taking advantage of the LAPS system mentioned in the show. I was generating leads and two weeks later I got six responses to my mail. Moving on to the analysis phase, three of the responses were out of my price range, two needed more work and are in kind of in a bad area, but one lucky duplex caught my eye. I analyzed the property further using the BP calculators and turns out the asking price is way too high for me to make a profit. I tried all three calculators (Fix and Flip, Wholesale, and Rental), but they all suggest I offer way less money for the deal. 

So now here's my question, Now that I'm on the proposal part of the LAPS system, I find it hard to offer $40,000 less than the asking price. I don't even know where to begin with the question. I'm trying hard not to fall in-love with this one deal, however it would suck if I just walked away because of the fear to ask. So does anyone have any suggestions on how to offer less money to the seller? 

I would appreciate any suggestions, thank YOU!

@Chabu Nsokoshi give us all the numbers on the deal asking price , arv, all the numbers as a rental.

Offering 40k less on a 300k property is alot different then offering 40k less on a 100k property. With more information we could give you some ideas.

give them a written offer for all cash with a quick closing and only a 5-day inspection contingency

@John Thedford

how do you offer all cash? does this mean you would have to use a hard lender? can you please go into little more detail on how exactly you would do this?

Thanks 

Yes if you offer all cash then you do need to have that available you could have a partner  you can have somebody willing to lend you the money it doesn't matter but remember cash offers are going to be taken more seriously than people asking for financing

Are an all-cash offer and a quick closing an option at this point? If you are taking on a note for the property just have your agent draw up a contract and make the offer. I love watching properties sit on the market for 7-8 months and submit a low ball offer. Someone beat me on this gem 1002 Grand Ave. 

The rental income from the small apartment unit would have paid half the monthly payment.... 

Keep in mind this is a business transaction and you should fall in love with numbers not realty. 

@Eddie T.  You've got a point, so here are some numbers. 

-listing price is $125,000

-approx repair costs $10,000

-closing costs $2000 

-ARV $145,000

-down payment 20% ($18,750)

-total monthly income $1,100

-total monthly expenses $1,276.63

it's clear right now the property is making negative cash flow each month, but that is because the current owner is renting one of the units below market price to one of his friends. The property is in a prime location, and after repairs the rents could go up $300-$400. 



@John Thedford thanks for the tip on cash offers, i'm sure that could be a bargaining tool, but I'm planning on going through traditional financing for this situation. I don't have a partner, and I think hard money is a last resort option for me.  

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