Bring an Offer!...How low do you go?

[DJ Cummins]

Good morning everyone! So there are two duplex’s I have been looking at. Both are currently for sale for 105k, down from 135k starting price. Owner says “Bring an offer.” How do you decide how low of an offer to make? At 105k, I feel like it’s not a bad deal already. They each are fully rented and bring in around $1300.00 per property. This would be our first 1 or 2 deals, and I am wondering how you come up with a number for an offer. Obviously he is willing to take less that the 105, because the “Bring an Offer” was the first thing listed by the agent. How do you decide? Do you try and figure the 2% rule and make that your offer? I don’t want to offend the owner and risk losing a good deal. Any info and advice is appreciated!
Thanks,
DJ

[Scott Nipp]

There are so many unknowns with what you have posted here so far? You say that the rents are about $1300/mo each, but what about the expenses? What does the insurance run in your area? Do you need flood insurance also? Do the tenants pay utilities? HOA dues? Any landlord registration fees? What is the age of the properties, and along with that how old is the roof, A/C, furnace, etc? Is this conventional financing, seller financing, or something else? I'm sure others will chime in with additional questions, but to get a good response to this you are going to probably want to include some more numbers.

Once you have a clear picture on your expenses you will then have a better idea of the cashflow for these properties.  Then you can gauge where to position your offer based upon these factors and what is a worthwhile cashflow for you.

Good luck with it.