Negotiations with Seller

[Alan Duff]

For my first purchase I am looking at a duplex listed at $150,000.  Annual rent is $16,500, water is paid by owner, averages about $70 per month. Building is in a good blue collar area and the rents are in line with the market. Each apartment is a 2 bed, 1 & 1/2 bath, total size about 1,100 square feet each. Most of the competition is around 900 square feet.

I offered the seller $115,000. All is subject to loan, appraisal and inspection.

Seller countered with $138,000. 

 Owners are two partners that are out of state, and have owned the building since 2011. Lots of deferred maintenance, not major things, but stained asphalt shingles, gutters need replaced, brick building need power washed, a couple of the fascia and soffit boards need replaced, all trim needs painting, ugly amateur ceiling repair where leak occurred, missing drop ceiling tiles in bathroom, no landscaping. Appliances are serviceable but look to be older models.

Per my numbers I think $130,000 is the most to pay as it cash flows about $2,000 the first year.

What is the best approach on trying to get the seller down to my number?

[Kerry Baird]

Walk away.