Buyer

[Frank Daly]

I'm looking at 4 unit apartment. I'm having a hard time with how much remodeling should I do to it and should I deduct the estimated amount from the offer. I like my properties to look nice. A unit is on the market for $119k and most likely there going to be four other bidders. Do I offer full price or stick to my thinking and estimate what the updates will cost me an deduct it from the sale price and most likely lose the building. The things I'm looking at to repair probably do not need up dated right a way. It is like if it not broke don't fix it type of thinking. Is there a percentage that I should use. I do know the every building I buy, I usually have to put about 4K in to it just to rent it.

[William Hochstedler]

You shouldn't base your offer on the fact that there are other bidders.  Stick to your criteria and make your offer based on that.  This is how investors over-pay for properties.  If you're in a competitive market and are constantly getting out bid, you may need to change your strategy in how you're finding deals.  The fact that properties are coming to market that are close to your criteria means that there are sellers out there and your criteria isn't unrealistic.  You may just need to figure out how to find them before the competition.

The seller will not necessarily know that you are reducing your offer by an amount equal to repairs and may not agree that those repairs are necessary anyway.  Again, you should be basing your offer on your own criteria which includes what market value is.  If this is already a great deal, the repair costs are probably priced into the asking price.  You can always negotiate repairs after you have it under contract and have more evidence like a third party inspection that they are necessary.

In short, you should be able to decide what your offer is without even knowing the list price.  The list price is only an indicator that the seller is willing to part with a property at something close to what you have already determined you are willing to pay-making it worth pursuing.  If you're not getting any properties this way, either your criteria is not realistic for the market or your are not sourcing your deals effectively enough.