Real Estate Agent · Athens, GA · Member since 2015 · 98 posts · 27 votes
Hello All,
Im looking into purchasing a multi family property in one of the best school districts in Georgia. The seller want an absurd price and I am trying to figure out a way to somehow make it a win win.
They are asking $1.8 million for 14 units but current gross rent is about 120k a year.
I know these numbers won't work with any sort of mortgage but I'm looking for a creative way to purchase the deal in order to raise the current rents to fair market rent which would bring in around 193,200 gross on the low end.
Ive tried running numbers every way I can think of for some sort of owner financing term but can't seem to come up with a way where it would work for both the seller and me.
Chicago · Member since 2018 · 214 posts · 165 votes
4y
You can't make a silk purse out of a sow's ear. When most folks buy things at low caps they don't have mortgages. They just park a ton of money into it and bank on the appreciation. If you're borrowing, you need a better deal in a shabbier but more profitable neighborhood.
Chicago · Member since 2018 · 214 posts · 165 votes
4y
You can't make a silk purse out of a sow's ear. When most folks buy things at low caps they don't have mortgages. They just park a ton of money into it and bank on the appreciation. If you're borrowing, you need a better deal in a shabbier but more profitable neighborhood.
Specialist · Indianapolis, IN · Member since 2021 · 312 posts · 282 votes
4y
Ask the seller/agent where exactly they are getting their numbers from. Are they just asking because they think they can get it, or is it based on legitimate appraisal methods?
Rental Property Investor · Concord, GA · Member since 2015 · 3k+ posts · 3k+ votes
4y
Don't try to make it fit. Someone may come along and pay their price but if it's not going to cash flow, what would be the point? Cash flow is what allows someone to coast through a financial rough spot. I think there's one coming due to all the money that was printed in the last couple years. The inflation is NOT transitory as "they" had been saying. I'm not expecting the real estate market to "crash" but I do see a very bumpy road ahead for the next few years. Next issue could be the government taking actions to make housing more affordable which could negatively affect REI.
Rental Property Investor · Killeen, TX · Member since 2017 · 337 posts · 100 votes
4y
There is a trend to what @Tom O. and @John Teachout are saying. Underwriting is objective. You can employ "creative" strategies when there is motivation from the seller. If there isn't any motivation then move on and find a deal where the seller has the motivation to sell.
By the way, here's a tip for finding motivation. The seller is showing that the price avenue is "Access Denied". Try another approach then. All you have to find is how to help the seller get what he or she wants. Only when there is rapport and you solve their problems then you can go back to the negotiation table and talk about a lower price.
But if the seller has debt on the property, then you can only go so low.
I hope this helps. I wish you the best in your investing journey!