Making Offer When Big Repairs Needed

[Derek Maxson]

Multifamily complex needs roofs and some HVAC units. What's your opinion? Make higher offer and then ask for $$ after inspections or make lower offer estimating the repair costs before inspections?

[Bryan Mitchell]

My last purchase, we negotiated the price and then during due diligence I had them fix everything on the list identified by the inspector. I treated this like a punch out list. Since I basically paid their asking price and it was fair, I had to make sure it would cash flow. To better ensure it CFs, I wanted to reduce the risk by  fixing all those issues that I know I’d have to deal with over the next several months to a year. You can’t predict all maintenance issues, but I could reduce the short and medium term risks.