Am I low balling my offers?

[Elliot Marszalek]

I've run the numbers on quite a few properties in my search area and have found that the majority of the ones I like the numbers aren't good on unless I offer way less than the asking price. I'd like to stick to my numbers so I don't buy a bad deal but the most recent one I ran came up with an offer price at 40% of the sellers list price to make it work. This was the lowest so far but most of them have been around the 50-65% of list price range after looking at rehab costs and rent rates etc. Should I be considering what the rent rates should be instead of where they are currently? If I would offer on something based on those rates and get it, do I raise the rents from day 1?


Thanks in advance for any help/advice on this!

[Jason G.]

Originally posted by @Elliot Marszalek:

I've run the numbers on quite a few properties in my search area and have found that the majority of the ones I like the numbers aren't good on unless I offer way less than the asking price. I'd like to stick to my numbers so I don't buy a bad deal but the most recent one I ran came up with an offer price at 40% of the sellers list price to make it work. This was the lowest so far but most of them have been around the 50-65% of list price range after looking at rehab costs and rent rates etc. Should I be considering what the rent rates should be instead of where they are currently? If I would offer on something based on those rates and get it, do I raise the rents from day 1?


Thanks in advance for any help/advice on this!

The market will dictate the prices, not what numbers work for you.  Look at what comparable properties in the market you are looking in are selling for.  If your required numbers don't work in that market, look at other markets.  If you are inheriting tenants you inherit their leases which depending on the lease and the local laws, you may or may not be able to raise the rent soon after purchase.