I just shot off my First Offer for Investment Property...eeep!

[Jim Keplinger]

Good Evening BPBT!

So, I pulled the trigger...whether it hits anything or not is completely up in the air tonight...but I have a profound dislike of cowards, so by gum, I ain't gonna be one! (This colloquialism in tribute to my current home in Indiana...please forgive me).

I would LOVE your thoughts, advice, and wisdom!

So, did I shoot the moon? Shoot myself in the foot? Or shoot nothing? Here's the details and my opening offer info:

Two duplexes in south-central Indiana (about 20 miles outside Bloomington) built in 1998 listed for 234k 

• 4 doors, 12 beds, 8 baths. 
• Fully rented at this time, two leases up but already asked to extend. One of the tenants is ripe for eviction. 
• Current rent roll is $2800 gross (~$700 each). This is low for the area, these units can easilly be $800 or $850 each.
• Current owner pays all water, sewage, and trash (that's going away ASAP).
• Roofs are original and show it, they need to go.
• Three HVACS are getting long in the tooth, one installed illegally. 
• Two of the four water heaters are questionable at best.
• One of the units has a "soft" kitchen floor implying water damage.
• All units have carpet (even in the bathrooms) that need to go. 
• The owner has turned down offers of $220k 18 months ago, and $180k a year ago. There has been no offers or interest since (according to the RE Agent).

My offer: 129k based on the rent roll and imminent CAPX. Too high? Too low? Where do I go now? 

Thank you in advance for any and all thoughts!

[Craig Curelop]

@Jim Keplinger - I am not in your market so it is tough for me to make a decision on if that's too high or too low. $129k seems like a pretty low offer, I would think you'd be good here. 

Sounds like the property needs a little bit of work. Once you get it settled though, it looks like you'll be able to raise the rents and can cash flow nicely. 

In the WORST case scenario, you will be over budget in your repairs and have over estimated the amounts you can get for rent. Maybe you lose a couple of bucks in this deal? But you will definitely gain invaluable experience through taking action! So Congratulations man! Even if you don't get this one, keep making offers until you can get in the game.