Please Help: First Small apartment deal

[Shayla Fletcher]

Hi everyone. i am a buy and hold investor who has up until now paid all cash on deals. after lots of BP reading i was inspired to purchase a small apartment building. My husband and i both have full time jobs and we are looking at this for income after retirement. my criteria was fairly new with some cash flow after expenses. Can someone tell me the best way to negotiate reductions or credits after an inspection on a property. For example, I am under contract on a 6 plex and I just found out that there is lots of minor damage in 4 of the units and they are not all rented. I have a formal inspection scheduled which will cost 1500 dollars. Should I try to see if he is open to the price reduction before I pay for the inspection? 

Building information 

C location 

Built in 2010

600/ month tenant pays all utilities (4 currently rented)

Purchase price 290000

Taxes 3332

Trash 172

Damage (water damage from top unit to bottom unit, wood floors need to be replaced as a result, 1 unit has lots of cigarette burns on some surfaces, etc) nothing major but definitely not what was seen in the unit that was shown before we were under contract.

How do I proceed

[Micki M.]

You're going to want the inspection, if you're already aware of damage there may be other items that you can't see and you don't want to find that out after you buy.  The inspection report is a helpful negotiating tool.  I would figure out what work needs to be done, put together estimates for the cost, run your numbers again and decide what the purchase price (or seller concessions) need to be for the deal to work for you.  The best negotiating tool in these scenarios is the willingness to walk away if the seller can't give you what you need.  What you don't want to do is let him "take care" of the repairs.

If he wants to sell and you're being reasonable he should listen to you. If he's an unrealistic seller he may not budge, but he should be able to see that any smart buyer in the future is going to come at him with the same issues.