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Updated almost 16 years ago, 12/29/2008
4 unit deal, should i lift my offer?
this deal im working on is a single family and a 3 family on same lot...right now im at $285K and it needs $25K in work, bank will be getting back to me nxt wk...realtor already said im probably going to have to go to $300 but I started at $270K and im not sure i should go to $300K...but when i look at monthly cash flow it tells me to go to $300K if needed
rents are $1400 for each unit...$5600 total monthly rents...very large 3 bedroom (could be 4 beds) units in 3 family and 3 smaller beds in single family...
i estimate my cash flow at $2233 per month...why shouldnt i raise my offer if needed...i guess im just looking for feedback either way
Here's how I see this deal:
Gross rents: $5,600
Operating Expenses: $2,800
NOI: $2,800
Mortgage ($310K, 30 yr, 7%): $2,062
Cash flow: $738 or $184 per unit per month, which is very good.
Yes, you could still raise the offer to $300K and be in good shape!
Mike
I think you're overly optimistic about your cash flow, but this still looks like a deal.
Rent $5600
Expenses $2800 (50% rule)
NOI $2800
Payment $2062 ($310K, 7%, 30 years)
Cash Flow $738
Cash flow per unit $184
That doesn't consider what other units are selling for in the area, or local conditions. If there are a ton of similar units for rent, this price might be high. If vacant units get snapped up in a few days, and there are lots of new jobs coming, and this is priced well under other properties, maybe you could pay a little more.
As long as the numbers (like rents) are what you say, this looks like a great deal to me and you do have some room to raise your offer.
broker called me today and said he had another offer at 290K and they wanted final and best...i went in at $300K, we'll see what happens, i really want this one, im ready for my nxt deal and this has the possibilities of condo conversion and/or subdivision down the road 10 yrs or so...
the other buyer went to $305K...i held at $300K but its kinda killing me- to lose out by $5k...but even if i went back in at $306K how do i know the other buyer wont lift to $310K, so im done on this deal, although the broker said he'd put both offers in and see what the bank says...
Don't let it "kill you" Stick to your guns. If your final and best price from YOUR analysis was $300k, stand by it.
Keep in mind that every single month, a deal of a lifetime comes across your path, so long as you have your eyes and ears open.
Of course, if $300k was not really your best and final, and your numbers show you can do $306, then you still have options on this one.
I do have one question for you. How do you know for sure that there is another offer on the table for $305k? The broker agent can not legally tell you what the other offer price is.
will,
from the start i said $300K is my limit...
i know the listing broker is not supposed to tell you what the other offers are but most of them will...and part of me doesnt believe him...he called me today and strangely told me that the bank wants both offers and that they might still accep my lower offer, something just doesnt smell right...keep you posted
BG, did you get it under contract? Details?
If not, I completely agree with Nationwide, "Keep in mind that every single month, a deal of a lifetime comes across your path, so long as you have your eyes and ears open." Especially now.
At the same time I can relate to "i really want this one." I've found that a week or two really evaluating a deal helps take my infatuation out of the consideration.
There could be lots of reasons why the seller wants to look at both offers and why highest price is not the only deciding factor. Could be the seller needs to close sooner vs later or vise versa. Could be your offer looks better because your credit scores, cash on hand or bank is easier to deal with or some other issue.
Do you have an agent working for you? Sounds like you are dealing with the sellers agent. I never like to work without an agent of my own. They can usually sniff something out for me. Knowing why the seller is selling is usually the best info to have.
Stick to your bottom line and keep looking. You will find it.
Diane
I believe that the sellers agent is probably trying to get you to beef up your price so that his commission can be higher.
Here's my approach always, give them the 300k, which I would have probably went lower than you and lost out if it were meant to be. You sound as though you have fallen in love with this property and that is the WORST mistake possible. You have actually made the agents job easy, because he is feeding off of your emotions as I am as I read these post.
NEVER, NEVER, get personal with a deal it is business. What happens if a unit goes vacant. See you must always look at the worst case scenarios and I have not read one from you where what if I get stuck making a monthly payment how long can I do that.
I would pull my offer and that would allow you to see if there was another offer on the table or not.
I am a DEALMAKER and it sounds like you are emotionally attached.
I would disagree and keep the offer on the table. I would also have all correspondence with this agent in writing. When you ask for something in writing, people tend to be more truthful. You said the deal works at 300k. Do not second guess yourself. If you end up not getting the property, thank the agent for his time and let him know that you are still interested in buying property and if anything interesting comes across his desk, to give you a call. You never know, this deal could fall through and he could call you back in a few weeks. Good luck and let us know how things work out.
Originally posted by Jeffrey Koenig:
I agree, this all leads back to being emotionally attached to the property, if the deal doesnt work out as you wanted it too move on. Dont offer more just because it looked like a good deal in the start.
Andrew
no news on this property, the realtor said he'd call me after xmas...i still want the property but wont go any higher than $300K...have i fallen in love w/ it?...i dont know...i do know at $300 it still makes damn good cash flow...
the property is still marked active and not UA yet...but i have a hunch its going to be foreclosed on
im also not worried about having an empty apartment, thats part of the game...in my market i can fill these 3 or 4 bedrooms in this neighborhood very fast even in the winter, they are way above average units...
if i can get it at $300K- great if not o well...im not planning on getting this one, bc there is another (supposedly) offer that is higher...there is a chance the realtor was pulling one on me, but from the start i said i'd go to $300K, therefore i started at $270K
Hello BG, I have read all the posts, I am a Real Estate Broker in Ca, and I see this all the time, It is my thought that when you find something that you love and it makes financial sense dont screw around, buy the property and get busy doing what you do. I want to know why you waited for someone else to come along and out bid you, all that has done is now caused you to doubt everything and everyone. You should have gone with the 300k from the start and you would not be going through all this now, you probably would be closed and on your way. As a Real Estate Broker, buyers always question our motives, just like Attorneys, but if you trust the agent and he or she tells you this is what you have to do to get what you want, all you have to do is decide, remember there is a reason we do this for a living. This is not the easiest career, and if the person has been the business for a while there is a reason for it.
Good Luck
Brooke Bailey
Originally posted by B G:
no news on this property, the realtor said he'd call me after xmas...i still want the property but wont go any higher than $300K...have i fallen in love w/ it?...i dont know...i do know at $300 it still makes damn good cash flow...
the property is still marked active and not UA yet...but i have a hunch its going to be foreclosed on
im also not worried about having an empty apartment, thats part of the game...in my market i can fill these 3 or 4 bedrooms in this neighborhood very fast even in the winter, they are way above average units...
if i can get it at $300K- great if not o well...im not planning on getting this one, bc there is another (supposedly) offer that is higher...there is a chance the realtor was pulling one on me, but from the start i said i'd go to $300K, therefore i started at $270K
BG,
It seems to me that you are getting played.
Your original offer should either be rejected or "countered", in writing. It sounds as if you are doing "verbals" with the listing agent. Get this deal in writing and refuse to respond verbally.
i know the listing broker is not supposed to tell you what the other offers are but most of them will...and part of me doesnt believe him...he called me today and strangely told me that the bank wants both offers and that they might still accep my lower offer, something just doesnt smell right...keep you posted
If they'll tell you a secret, then lord knows what they will tell the other side.
By the way, I don't know of any realtor that works harder to get a higher price so that they earn more commission. The difference in commission between 300 and 305 is insignificant. What makes all the difference in the world is how many "sides" do they get and/or their relationship with the seller.
Sorry BG I disagree, My Realtors will work for a lower but better offer, Mr peeples is speaking from personal experience! I know from first hand experience that many agents speak verbal offers to save time and 10 counters, maybe not supoosed to but they do, and if you ask any buyer or seller if they would rather do this than sign numerous counters. You are probably not getting played just someone else to throw doubt in the game! Good Job David....
Brooke Bailey