Help with Foreclosure highest and best offer in24 hours

[Account Closed]

Hi Everyone,

I am requesting help analyzing a deal before I put my highest and best offer which is due in 24 hours.

I currently owner occupy a 2 unit which will help offset the price of this property when i move out.

The property address is 727 21st Allentown Pa.

Has 2 car garage which other houses don't. Usually just 1

Asking price:139k

last sold: 157k in 2011

ARV: 175-180k if made really nice.

All comps : 160-170.

Preapproved for 3% conventional loan.

Initial offer : asking price and 3% seller assist. 1500 earnest money

Looking to possibly offer 155k no seller assist and $5000 earnest money.

What are your thoughts on this? We are buying it under my fiancees name and will owner occupy for a couple years or few, while investing still hopefully.

Really want to leave my 2 unit and rent the 2nd unit. Do not like living on top of my tenant and we have a 2 year old. We are dying for a SFH. We don't want to lose this deal. Would appreciate anyone's reply or even call me at 484-fourzeroeight7795.

Thanks,

Gavin

[Syed H.]

I know the market well, I have a small portfolio in the area. The market is extremely tight in the LHV right now. Supply is nonexistent. Rents are insane. I get $1200-$1300 for a smaller house in 18102. $100-$150 for a garage is normal. 

I think you can def get $1400-$1500 in this market.

However, this is not a good cash flow buy & hold unless you want to bet on appreciation IMO.

Here's why:

Purchase Price $155,000

Rent $1,600 

Gross Income= $19,200

Yearly Expenses

• Taxes= $3,881 
• Insurance= $1,250
• Vacancy (7%)= $1,344
• Management (7%)= $1,344
• Maintenance/Capex= $2,000
• Trash= $375
• Rental Permit Fe= $75

Total Expenses= $9,769

NOI= $9,431

Cap Rate: 6.08%

That cap rate is way too low for me. Now if you are buying this as your primary, that's a different calculation. But as a buy & hold, it doesn't make sense to me.