Help me underwrite and come up with cash offer

[Jeff D.]

Rent totals annualized $44,250

Expenses Annualized $18,968

NOI $25,281

Asking is $350,000 (5 units) all 1 bedrooms

Not much room for value add. Building is solid.

2 units have tenants that have been there 20 plus years ( their rents are about $100 per month under market rates)

I can maybe raise rents a bit for $2,400 more a yr

I can pay cash. What should my offer be?

[Greg Dickerson]

@Jeff D. that's a question only you can answer. The property is worth what it's worth to you and your return requirements. Based on the numbers you listed the current asking price is 7.22 CAP so you should look at comps for values, sale price to ask price ratios and going CAP rates in your market for this type of asset. You need to make sure to frame your offer from the perspective of an appraiser and supply supporting information to justify a lower offer than asking.

Cash doesn’t mean much in this market unless they are highly motivated and need to close quickly or have multiple offers with contingencies.