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Updated over 9 years ago,
Am I getting desperate? Bidding on 4 plex on Monday ...
Hi all,
We currently own 2 sfh and 1 fourplex and we are about to bid on another 4 plex on Monday. All units are in Albuquerque, NM. Inventory has been less than quality in NM over the last year and so I'm hoping you guys can keep me on track. My concern is that I'm justifying this deal because I've been hungry for a deal for the last 12 months! Here are the stats.
Listed at $525k, DOM 180.
Offering $475k
Annual Rents ~ $52k
NOI (factoring 5% vacancy, 8% mngmnt, plus other expense) ~ $18k
Cash ROI ~ 6.8%
Property is all 1 story and units are spacious, new appliances, central air/heat, security in place. I can't find any faults physically (realtor did a walk through already) and will rely on our inspection for due diligence.
We'd be putting down 25% and I'm anticipating loan to be at 4.6%.
Our last deals have all returned 9-10% returns on cash, so we are definitely lowering our bar on this one. But I'm justifying it as it needs no renovations (the others were minor rehabs) and I like the unit mix (2-3 bedroom, 2 bath, all enclosed yards). I am also justifying it since I have been actively hunting for our next property and there has been nothing in the last 12 months.
The property has been on the market for quite some time, so safe to say that the current investors and their realtor are holding out for an offer closer to their listing. I'm looking at going in at $475k but have no room to move up from there. I feel that an offer at $465k would not provoke any counter whereas $475k might.
My question is ... as an investor should I accept what the current market has to give (a 6.8% COC) or keep my money in the bank!
Your comments are truly appreciated.
Lorraine