Need Help with Counter Offer!

[Todd Mason]

Hey everyone I could really use some help with this one.  I have offered on a duplex with the figures below and seem to be up against a stiff necked seller.  Rents are low and current market does allow for an increase of $100-$200 per unit.  This would be my first deal and in my surrounding area prices like these are non existent.  Just wondering if I should really play hard ball or take the deal to gain experience? Any advice as how to counter back would be great!

List Price: $105,000

Down payment: 25%

Unit one (2/1) Rent as of now: $500

Unit two(1/1) Rent as of now: $350

Total :$850

My offer: $90,000 and seller pay appraisal fee

Seller Counter: $103,000 and would pay appraisal at closing as long as deal goes through

I ran all my numbers at max pay $95k and would cash flow after all expenses $224, the variable would be at those numbers I'd have it professionally managed. I can basically get the same cash flow at the $103k but would have to manage myself, which I was highly thinking of doing anyway but my COC would be 7.61% which I think is good for my first deal

Agent says this is as low as he will go, and would not advise a counter to this. But I want to counter!  Thats it in a nutshell I think, any help would be great thank you!

[Marcus Auerbach]

@Todd Mason there's a lot to unpack here.

First, never fall in love with a house. Fall in love with the numbers (and they don't look very lovely here according to you).

Second, how much is the property actually worth? Did your agent run comps to establish fair market value? You can't pay more than FMV. Is 105k a somking hot deal or unrealistic overpriced?The goal is not to beat up the seller, but to get a good deal. Think win-win. If you don't have an agent, know that the other agent will get double commission for working against you..

On a cheaper property like this one you should get significantly more than 1% in rents. In other words if they are asking $105,000 rents should better be over $1,250

You did not mention anything about the condition of the property. How much will you need for improvements in the next 5 years, 10 years? What are the components with the shortest remaining life? Kitchens? Bathrooms? Windows? Roof?

Most sellers have a problem breaking a major price ceiling like 100k. It would mean to admit defeat. How about you counter back with 103k, but ask the seller to give you a closing cost credit. Or pay for new HVAC.

How many deals have you looked at? Old wisdom is you should consider 100 listings, see 10, offer on 3 and buy one. How many days has it been on the market? 5 days? Come back in a month..

I can only give you some food for thought with the very limited information I have. The best advise I can give you is to find a strong local agent, who understands the deal and can consult you on these questions.