Good evening BP fans
I am looking at getting my second duplex , and I need a little bit of help as to what your thoughts are on it.
Location: Midwest town of ~70-80k people (growing)
2 units, 2400 sq ft total. 6bd / 3 bathrooms
3 car detached garage , and great parking spaces
Gross Market rent ~$2100
Taxes: 3200 , insurance $850
Recently remodeled so I expect very low capEx over the next 5 years. I will be self managing.
$179,000 asking price. In my market it is going to get multiple offers. I am confident offering over asking price but do not want to over pay.
How would you structure offer?
Im thinking about offering 197.9k , and I’ll pay closing costs with Earnest money of 10k (per Brandon’s podcasts to attract attention).
I want to get this property outside of my LLC , at 30 years to make it a nice cash flowing property. ~650 per month (with capex vacancy and maintenance set at 6%)
Any thoughts ?
Thank you 🙏
On the surface it sounds like a decent opportunity. Do you have a broker helping you out on getting this? If so, they should probably have some ideas for you. Being a broker myself and working with buyers, one thing I will ALWAYS do, is make sure I call the listing agent. I can't tell you how many stories I hear about brokers NOT making phone calls to the listing agent and understanding the full picture and most importantly, making the connection and gaining rapport. Stories that cost the buyers way more money than it should - i.e. There must be multiple offers so they offer above asking, but if they called they would have found out their offer was the only one.
Assuming, however, that you're correct and there are multiple offers coming in. Ask question about the sellers motives. Find out what they want, maybe something else besides a higher price. Tell them about how it will be easy to work with you, you'll make it to the closing table, you'll not ask for a bunch of concessions - maybe taking the house AS-IS. You can take out contingencies. What lending are you getting and how much are you putting towards the property. You can put an escalating clause so if you know you'll pay higher than an initial offer and you want to beat out all the rest, escalate it based on other offers - but of course knowing what your competition is first certainly helps. All this does matter and your broker can help you on all that.
A duplex property you'll also most likely have to get it personally and then if you want you can quit claim it to your LLC after closing.
@Jorge Hernandez Seems like a good plan but what about the appraisal? If it doesnt appraise for 197 what is your plan? In Texas there is an addendum to address this and if you wanted to make your offer stronger you could agree to pay the overage if it does appraise low. Or to protect yourself, say it has to at least appraise at list price otherwise you negotiate down. Good luck
Thank you both very much for the replies. They helped greatly to structure the offers :)
I ended up offering he 197k, no contingencies. I was going to pay the difference in appraised value and offered value. However I got outbid by someone offering > 200k ; other buyers with 200k offers also did not get the property.
@Jorge Hernandez How did your offer work out?