Figuring out an offer price

[David Roberts]

I recently put in an offer on a home to purchase as a rental property and I think I was too low.  I'm just wondering if someone could walk me through their thought process and considerations on how they come up with their offer on a house.

This particular house was a private owner who inherited the house.  Their mother lived there.  It was well kept.  It needed new carpet, and it had wallpaper on every wall in every room, so I was going to have that stripped and then paint all the rooms (1000 sqft slab 3 bed 1 bath home).

Otherwise, it was ready to go.  They were asking 79k.  Other comparable homes were asking 85-90k.  I offered 70k, and was thinking to come up to 75k but I didn't get a chance to offer again as another offer was submitted and accepted.  I guess I was hoping the owner (who lived out of state) would just want to unload it.

The other very comparable homes in the neighborhood are listed for 85-90k.  I used zillow to research all recent sales in the subdivision.  No homes in the past 3 years have been sold for more than 75-76k.  I don't want to be the first to pay 80k.

[Joe Villeneuve]

How did you arrive at your asking price to begin with?  If you analyze your property correctly, you will never offer too low a price.  You may not get the property, but your offer wasn't too low.

You don't make offers based on what you think you need to offer to get the property.  You make your offers based on what you CAN offer to make the numbers work for you.  In this case, cash flow...since it was going to be a rental.

If you offered more money it, and the property didn't cash flow because of it, then you may have won the property, but you lost as an investment.

The only numbers that matter are the ones coming in your direction with $$$ in front.  The number of properties you own doesn't matter.

Joe Villeneuve
REcapSystem
A2REIC