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Updated over 8 years ago on . Most recent reply

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Andre Bederio
  • Long Beach, CA
2
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10
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Submitting low offers

Andre Bederio
  • Long Beach, CA
Posted
Does anyone have a formula or "rule of thumb" they follow when submitting an offer for a sfr that's been on the market for a while? Assuming the house will be used as a rental and nothing needs to be done, how does the duration on the market affect your offers?

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Michael Mullins
  • Investor
  • Cedar Park, TX
177
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Michael Mullins
  • Investor
  • Cedar Park, TX
Replied

I could be wrong, but the asking price isn't that important to me really. I'm a buy and hold guy too, so I'm looking at what CASH FLOW / ROI can I get with this investment. It's a wooden box that is all. You can call it a duplex/ house / apartment, it doesn't matter. IT"S AN INVESTMENT.

So I run my numbers (biggerpockets/rental cal) to find out if I want to purchase it based on my requirements of my rental properties.

So let's say I want $200 a door with a ROI of 10%, if it doesn't match that or more, I can't buy it.

Then when I find one I want to buy, I reduce the price by $2,000 or $3,000 so I can negotiate with them. Let them keep face as they say.

I also allow my agent / broker to explain to them that I’m an investor and the numbers I’ve run states that I can’t more too much on the price. At the end of the day it’s important to understand that it’s just a wooden box, you will find another wooden box to invest in. As investors we are looking for what wooden box / stock / index will pay us the most.

I hope this helps, and I hope you get your wooden box.

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