Will this influence your offer price

[Jack Srimani]

Hi,
I am considering purchase of four unit property, Currently I am going through price negotiation. This is a renovated fourplex with rents of two for 550 each and rents for other two are at 600 each. Each owner pays their own utilities. Now the two percent rule leads to maximum purcahse price is 115000. (Total rent * 50)

When I checked zillow I am seeing the average price of SFH in the neighborhood is 35000. Now with that scenario I would like to have experts' opinion to see if you had this situation will the neighborhood house price influence your decision to make offer of this property? I need some advice on this. Also does the neighborhood price going to influence the buyer when I decide to sell.
Thanks

[Dale Osborn]

Sounds like we are comparing apples and oranges. With a comparison of the cash flow from other 4-units in the area, you would have a solid basis for a comparison. Rules of thumb are great ways to quickly determine if you want to persue the deal further. A rule of thumb like the 2% rule does not have to be the final authority. Money in less money out - what is left over for debt service and Owner pocket change? Once you determine it will not work for you - move on to the next property without wasting a lot of time on the property,