Seller and I are at an impass. :-|

[Daria B.]

I offered on a property done by rehabbers. They want to make their profit and I want to make my returns. 

Originally, they priced the house at $94,900, someone else offered and financing fell through. I don't know if they were investors or owner occupants. After that offer fell through they raised to $99k (presumably after doing additional work in the kitchen). I offered $90 and they countered $97,500. I countered $92k as that still works for my numbers.

There was already a newer roof (remaining life 19 yrs), hvac, and w/h installed 2005 with an electrical upgrade. Appears they did about $30-40k work to redo the kitchen, flooring, and baths and paint.

I'm considering zeroing out my CapX or reducing it that I would normally put away for those things that have already been done.

My offer is based several things and CapX is one of them and in this case the major systems are much newer.

I'm trying to adjust for this in my offer but I don't want to pigeon hole myself into meeting their offer where my numbers then just don't work for me. Even with newer systems, things can happen and that would completely affect the cash flow.

The range of rent is $950-$1100, this is a 3/2 1300 sq ft. Non student rental area so mid-range (?) professionals and families. I don't want to bet on $1100 or more just because of the condition, which is actually good.

My agent said that other OO in the area have paid up to $100 or more on properties in the area. Condition though unknown so how that compares is an unknown.

My financing would be @ 25% down 30 yr @ 5%.

Taxes: $1500 yr (will raise when purchased as properties are reassessed each year) currently no homestead or exemptions

Ins: $1000 yr

R&M: 4%

CapX: 4% (also zeroed this out but for conservative left it in to see worse case)

PM: 10% (mo on gross)

Landlord License: $204 (yr)

Various scenarios (all include 4% for CapX and R&M):

How have others adjusted for CapX when systems are newer? Did you zero it out or just adjust down the percentage?

Thank you.