Leave the deal or stay?

[Nina Rosete]

We are under contract to purchase a 4-unit student housing property. The location of the property is A+. We are very disciplined with our investments and we make sure that everything we buy meets the following criteria:

- 1% rule

- 50% rule

- cap rate of > 6%

- Per unit cash flow of at least $250

We put an offer on the building based on financials provide in the offering memorandum. After getting actual financials, cap rate is now <6% and cash flow went from $340/unit to $250/unit.

My questions:

1. would you leave the deal or keep going given the new financial info?

2. Would you lower your offer to get more favorable financial stats?

Thanks in advance!

[David M.]

@Nina Rosete

You say you are really disciplined, so if its a bad deal its a bad deal.  sure, if the seller will budge to make it a good deal "again," sure.  Otherwise, walk away.  Why would you compromise your criteria?