Method to "back in" to an offer on a rental?

Question

I am relatively new to BP and real estate investing. I have an opportunity to acquire 4 rentals in one deal. Each is currently rented, and the combined/total rental is $3,975. I know what the annual taxes are. I can estimate insurance, closing costs, etc. I know what the county tax assessed value is, which I realize is never an "accurate" number for market analysis. But...

Is there any kind of formula anyone uses to "back in" to a maximum offer price in order to enter into a further negotiation on this deal?

Regards... Thank you...

Is there any kind of formula anyone uses to "back in" to a maximum offer price in order to enter into a further negotiation on this deal?

Regards...  Thank you...

Joel Owens · Answer

Review the file on each tenant for desirability before purchase. How seasoned the tenants are matters as well meaning if they have paid on time for years with little to no issues that is great.

4 properties that are CURRENTLY rented means nothing as the tenants have not shown yet whether they are a dream or a nightmare with payments and how they treat the spaces they live in.

Think of a mortgage note with little to no payments yet. All you have to go by is the underwriting on the note. Same with a tenant with weak screening and placing a tenant fast to fill up properties and claim income to try and sell at a premium price.

Take the worst property in the BEST area. If it's just  a bad renter then you can get them out to find a good one in a nice location. If the area is instead depressed then most tenants will not be a great selection and no matter how nice you make the property it will get trashed again. Area is KEY over perceived additional cash flow.