I think I am ready to move.. suggestions on this deal

Real Estate Deal Analysis & Advice
16yFollow

I think I am ready to move.. suggestions on this deal

Billy W.
Real Estate Developer · Los , Angeles · Member since 2010 · 53 posts · 6 votes

Hello Everyone,

I have found a property that I am interested in. I posted this deal a week or two ago, but I have some more information and I would like to get others opinion on the deal.

-4 Unit Duplex
-Total Rents: $2100/month
-Fully Rented with year long leases
-Units are in good shape, absolutely no noticeable renovations needed
-Blue collar neighborhood
-I will add coin laundry for basement

Expenses (as current owner told me):
Electric $119 a month
Insurance $140 a month
Water $20 a month
Sewer $15-20 a month
Trash $40 a month

Taxes on this property are around $3800 a year.

Asking Price: $122,000 (down from $133,000)

Current owners bought this property for $132,500 in 2004. They refinanced the property in 2009 at $114,000.

RealQuest.com gave a Corescore of B and a estimated market value of $85,000.

What do you guys think of the deal?

I do not want my first one to be a bust. How low should I start my first offer? I was thinking offering $90K.

I will include in my offer that it is contingent on an inspection first. Anything else that I should include in the offer? (appraisal? :/)

Any other advice in proceeding?

Thanks

0Reply
20 views

Most Popular Reply

Tracey B.
Real Estate Investor · MD · Member since 2010 · 124 posts · 84 votes
16y

Billy, do you have any zoning, multi family dwelling licenses or other requirements for multi units in your area? In my area we have to have license, lead certificate on each unit, separate meters for gas and electric. Does the unit require these things? Does it have separate meters? Can you view proof that tenants are paying each month and not behind? Also, the asking price has to be in line with the value of the property. Have you had a realtor pull comps for you or have you done any research on what the true value of the property is? Do you know what kind of rents to expect per unit and do the rents fall in line with the current leases? I would need to know these things to really help you evaluate such deal as everything has a price. On the surface though I would be interested in it. Have you done a walk thru, how are the tenants? Do they have bad attitudes, have they given you any complaints about the owner? Definitely talk to the existing tenants and see what they have to say, they may tell you things like "the roof leaks, etc etc." Be sure to do your due diligence. I bought a duplex in move-in condition and a few months after I closed, the furnace needed ti be replaced, the roof leaked, etc. These things can get costly if you aren't prepared. Make sure you check out the roof and furnaces.

1Reply
See this reply in the discussion

9 Replies

Jump to latestLatest
  • Tracey B.
    Real Estate Investor · MD · Member since 2010 · 124 posts · 84 votes
    16y

    Billy, do you have any zoning, multi family dwelling licenses or other requirements for multi units in your area? In my area we have to have license, lead certificate on each unit, separate meters for gas and electric. Does the unit require these things? Does it have separate meters? Can you view proof that tenants are paying each month and not behind? Also, the asking price has to be in line with the value of the property. Have you had a realtor pull comps for you or have you done any research on what the true value of the property is? Do you know what kind of rents to expect per unit and do the rents fall in line with the current leases? I would need to know these things to really help you evaluate such deal as everything has a price. On the surface though I would be interested in it. Have you done a walk thru, how are the tenants? Do they have bad attitudes, have they given you any complaints about the owner? Definitely talk to the existing tenants and see what they have to say, they may tell you things like "the roof leaks, etc etc." Be sure to do your due diligence. I bought a duplex in move-in condition and a few months after I closed, the furnace needed ti be replaced, the roof leaked, etc. These things can get costly if you aren't prepared. Make sure you check out the roof and furnaces.

    1Reply
  • Billy W.
    OP
    Real Estate Developer · Los , Angeles · Member since 2010 · 53 posts · 6 votes
    16y

    Thanks for the reply!

    I am not sure about the license! First time I have heard that you need a license to own a multi family. I will check that out.

    Each unit has its own meters and they all pay their own utilities.

    I have not had a Realtor pull comps. I do not plan to use a Realtor, so would a Realtor still be willing to pull comps for me?

    I do know what the rents are for each unit. I would ask to look at the rent rolls, leases, etc before we finalize the deal after i put in an offer.

    Two units have been living there for a few years. I have not had the place inspected yet, but I did a walk through. The place looks very kept up. The roof was put on in 2004. Furnace is brand new.

    Also, the owner said they are currently reviewing another offer, which they have been reviewing for a week and a half now. What are the chances that they are just telling me that w/o actually getting a real offer?

    0Reply
  • Tracey B.
    Real Estate Investor · MD · Member since 2010 · 124 posts · 84 votes
    16y

    Ok, well sounds good. Here we need whats called a multi family dwelling license where the city comes in and inspects the unit. I would candidly ask the seller why they have been reviewing another offer for a week. If they're telling the truth, maybe the other offer is too low. If that is the case you need to ask them where do the numbers need to be for them to sell the house to you. Make sure to review leases and such, actually your contract may want to read that you have an inspection period to verify all information under which you can cencel the deal if something he told you was a lie or didnt fit with your investing strategy.

    0Reply
  • Billy W.
    OP
    Real Estate Developer · Los , Angeles · Member since 2010 · 53 posts · 6 votes
    16y

    I asked her what the price range would be to make this happen, she just told me to make an offer. I also asked if she could give me a ballpark on what the current offer is--- no luck on that either hah.

    0Reply
  • Tracey B.
    Real Estate Investor · MD · Member since 2010 · 124 posts · 84 votes
    16y

    Billy, dont let this lady play games. You need to get a little aggressive. How did you find her or did she contact you? Is she motivated to sell to you at all? Is it a listed property? If you are seriously interested you need to tell her that you are interested in making a deal happen. Clearly she wants something she doesnt have or she would have accepted the offer she currently has. "Maam, if I could buy this house within 30 days would that work for you? Ok at what price would we be able to wrap this up today? There are a lot of deals out there right now and if we cannot work something out, I will have to move-on. I want to take this off of your hands but you need to tell me what I can do to make it happen. Would 90k seal the deal? Ok then tell me what number will seal the deal so we can write this up and get the ball rolling. Well if you can't tell me what I can do to take this house off of your hands today, here's my number. When you're ready to sell, I am ready to buy."

    1Reply
  • Billy W.
    OP
    Real Estate Developer · Los , Angeles · Member since 2010 · 53 posts · 6 votes
    16y

    The house is non MLS. I found her through one of her ads on craigslist. The property is owned by her husband and she is the Realtor.

    She told me to make an offer, so I am going to throw a number out but I wanted to see what BP thought of the deal overall before I proceeded

    0Reply
  • Josh Green
    Financial Advisor · Tampa Area, FL · Member since 2008 · 956 posts · 214 votes
    16y
    Originally posted by mdlandlord:
    Billy, do you have any zoning, multi family dwelling licenses or other requirements for multi units in your area? In my area we have to have license, lead certificate on each unit, separate meters for gas and electric. Does the unit require these things? Does it have separate meters? Can you view proof that tenants are paying each month and not behind? Also, the asking price has to be in line with the value of the property. Have you had a realtor pull comps for you or have you done any research on what the true value of the property is? Do you know what kind of rents to expect per unit and do the rents fall in line with the current leases? I would need to know these things to really help you evaluate such deal as everything has a price. On the surface though I would be interested in it. Have you done a walk thru, how are the tenants? Do they have bad attitudes, have they given you any complaints about the owner? Definitely talk to the existing tenants and see what they have to say, they may tell you things like "the roof leaks, etc etc." Be sure to do your due diligence. I bought a duplex in move-in condition and a few months after I closed, the furnace needed ti be replaced, the roof leaked, etc. These things can get costly if you aren't prepared. Make sure you check out the roof and furnaces.


    i'm sure this has some useful info it but to be honest, i can't stand to read it. would it kill u to hit the 'enter' key every now and then? :wink:
    0Reply
  • Tracey B.
    Real Estate Investor · MD · Member since 2010 · 124 posts · 84 votes
    16y

    Ok Josh just for you

    0Reply
  • Josh Green
    Financial Advisor · Tampa Area, FL · Member since 2008 · 956 posts · 214 votes
    16y
    Originally posted by mdlandlord:
    Ok Josh just for you



    u are awesome! :lol:
    0Reply
Join the conversationCreate a free account to reply, vote on answers and follow this thread.
Log InJoin for Free