How to make an offer

[Fereidoun Jahani]

Dear BP colleagues, 

Hope you are all doing well. I am interested in reading your thoughts on how to make an offer to prospective sellers of multifamily properties and wanted to know what is the process of making an offer? I would appreciate if you shed some lights and share your valuable experiences. I live in southern California and interested in buying up-to-4 plexes or whatever works out. Here are my thoughts:

1) Get a pre-approved max loan amount: 20% down, FHA, 203k, etc...,

2) Find a real estate broker to help getting me MLS listings and other related matters,

3) Do analysis to determine existing Cash-on-Cash and Cap Rate metrics. Sometimes MLS listing I noticed have questionable numbers about the expenses and am wondering if I should skip those listings that are may seem suspicious or should I research them further and get more accurate expenses than in MLS. What about taking a look at the property inside out? Is this the right time to do that? The purpose is to get more accurate information about the CONDITION of the property in order to do a more ACCURATE analysis,

4) Write an offer to the seller and wait. Is there a way to write an offer not to intimidate the seller? Is there such a thing as sellers becoming attached to their property or they just don't care and want to sell and retire without hassle, < not done yet>

5) If the answer is NO in step 3, walk away, <not done yet>

6) Repeat steps 3 through 5 with another property. < not done yet>

Based on analysis that I did on certain properties, I was surprised to see that the Escrow had closed on this one property that did not have acceptable cash-on-cash and cap rate. I am wondering why would anyone invest in such a property. Is it because the buyer did not do any analysis?

Thank you for your thoughts,

Fereidoun