First Rental Property Offer

[Matt Greene]

First of all, thank you to everyone on here for the incredible information and being so open about your experiences.  Hopefully I can help someone else while being open with my process.  Below I will be recapping what I hope will be my first offer on a rental property and am looking for any constructive criticism. I am planning on offering on a duplex in Edgerton, WI, 30 min SE of Madison, WI. I will be walking the units tomorrow morning with my realtor and property manager.

The Property 

The property I am looking at is a side by side 2 story duplex sitting on 1/2 an acre.   The listing does not show the year built, but I am assuming it is a 50's build.  One side is a 600 SF two bedroom that is currently rented for $700 a month and the other is a 950 SF three bedroom that is currently rented for $800 a month.  The three bedroom side has been updated with new cabinets and some new flooring.  All utilities are separated.  It is being listed for $149,000.

The Deal

If all goes well tomorrow, I am planning on offering full asking price and going in with a 20% down offer on seller financing at 4% interest.  I will write in that rates will balloon after 3 years as reassurance I will refinance when able to.  I am using a third party passive investor for the 20% down payment and offering him a 50/50 split on rent and 7% interest on their investment after the building is refinanced.  I will be covering closing costs and will manage maintenance/repairs.  

I will try and update as I make my way through this exciting process.  If this property does not work out, I will continue the journey.  Thanks again to all who have unknowingly helped me to this point.

[Bridgette Delva]

Hi @Matt Greene congratulations on identifying your first deal.  I'm assuming you've done the analysis but I have several questions that come to mind and a couple comments.

First thing is it's pretty easy to find your deal when you give me the city and asking price so I'd advise that it's probably best not to disclose the deets on your deal until it's done.  The description and financials are enough to get the input you need on the forum but I was able to pull it up on Zillow very easily with the deets you provided. ;-)

I will say that the property is lovely and I see TONS of future potential to build more units or add ADUs in the future. The lost is definitely attractive.

Speaking of the lot, who maintains it?

What is the COC return?

Are you planning to house hack or rent both sides?

Are both sides occupied? If so, do they have a lease? If they do have a lease, have you read it?

Are the rents competitively priced? Would be an easy answer for a PM to provide.

Why do you want to offer full asking price? Is the market competitive? If so I can understand but just probing to see why this warrants full price.

Any idea why the seller wants to sell?

Has the landlord provided the rental cash flow, P&L statement or financial other statements?