[Calc Review] Help me analyze this deal - Omaha

8 Replies

some more info on this - It is a duplex in a historic gentrifying area of downtown Omaha.  I am having a super hard time figuring out comparable rents so I am just going off rentometer.com and Zillow.  The current landlord says the property is vacant currently.  He renovated and did everything super high end so there isn't really any forced appreciation opportunity.  

The numbers ran don't seem to work even at a $100k less offer than his $350k that he said he wants.  I ran the numbers as a wholesale deal because this is would be my first deal and I currently don't have funding for something this expensive.  I'm really just taking the "wash the truck" approach and diving in, that's why I sent the letters, but now I have people calling and I'm unsure what to do next.  My main two questions are:

1. what is the best way to give this guy a "low ball" offer and keep a good relationship?

2. Am I on the right track in my real estate investing journey?  

@Dave Arbaugh , congrats on taking the plunge into action. Have you thought about asking about seller financing?  There may be a creative strategy where you can give a higher purchase price if they can offer a lower interest rate than your bank.  Maybe bringing in equity partners and you get management fees?  Just a few thiughts

@Andrew Bradley Good questions. You are right there is no place to push the value with property improvements as they have all been done already. My thought was when I ran the numbers as a rental (after talking to a management company for advice on what they would rent for) It seemed to be a great deal for an investor if they could buy the property from me for $260k I figured 10% for vacancy 5% for repairs and 5% for CapEx with all that factored in it would still cash flow almost $900 per side. I offered him $250k for it hoping to make $10k on the wholesale flip. He passed but did say he would probably consider $300k and he for sure wants out of it before the year is over... so I am still working him.

As far as ARV... that one was super hard to figure as it is in a unique area of town with lots of new condo construction, two bed one bath condos even the ones that aren't new construction sell all day for $225-$250k.

Any advise and wisdom on this is welcome as my main goal right now is to learn as much as I can. 

Hey Dave, 

I am new to the forum, but just wanted to chime in.  We have been purchasing a few smaller multifamily buildings this year, mainly duplexes.  When we underwrite a deal, we typically use the following:  7% vacancy, 15% repairs, and 10% management.   Just wanted to throw that out there, not sure how others structure their deals, but typically that is how we figure.  Hope that helps.  

Beautiful restored home in rating 1/2 school neighborhoods. I suspect it is worth $100/sf. Any reason why the home was on the market ~1 year and not sell?

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