What should I offer and how?

[Josh Baker]

Looking for some advice on a potential deal. Specifically I’d like to know how you would present the offer I have in mind based on the information below.

I am a newbie.

4 unit class B multi-family in a class B location (close to downtown)

List price – $299k. The price I have in mind is $271k

Comps are $250-300k

I'm house hacking this one so I can use FHA.

Current rental income is $2800 / month for all four units. All of the units are currently rented.

I plan on raising the total rent to $3400 (it is currently under priced)

I plan on putting $5-10k into rehab

At the $271k price I’m looking at an estimated -$26 cashflow loss while my wife and I are living there and a $355

cashflow gain when we leave.

$391 doesn’t seem like much so I may put one or two units on AirBnb. Similar units in the area typically pull in $500 more per month on a short term basis vs. long term

The seller purchased the house 1 year ago for $210k

I’m inclined to offer $265k and see if the owner counters. I’d also appreciate any feedback on whether this is a smart first deal.

[Jason D.]

@Josh Baker The first thing you need to do is find out what the tenants' leases are. Because you will have to evict one, you need to make sure that you can do that legally. Second, know that you are purchasing at full market value, so make sure that aligns with your goals as well. Make sure that you are accounting for all expenses.... vacancy and maintenance, and are there any landlord paid utilities? Other than that, if the numbers work and you are comfortable, then it's a good deal.