How to price offers for off-market deals

[Eli Kallison]

I have been running into the issue of not knowing how to price offers for off-market deals I find from direct mail campaigns. 

I am operating in a market with a very heterogenous real estate landscape in a relatively small county, so comparable sales data from Zillow, Realtor, etc is a little finnicky. 

Does anyone have a strategy for how to price offers? I am hoping to send some blind offers in my letters, and I want to develop a good system for determining price.

Thank you!

-Eli

[Damaso Bautista]

@Eli Kallison

Hey Eli,

I think at minimum you need to figure out what the properties in that area would rent for.  Once you have that information you can work that number in for cash flow and cash on cash return based on a number you pay for a house.  You can use different down payments and even all cash scenarios to figure out different numbers.  

After doing these exercises you can come up with the perfect number to offer on a house based on your investment criteria.  

Your offer shouldn't be based on market value, it should be based on the returns on the investment that you are seeking.

If you don't know how to analyze numbers on a rental I would suggest watching a youtube video by Brandon Turner called "Calculating numbers on a rental property using the 4 square method"

Good luck!!!!