How to Tell a Seller His Asking Price is 2 High!!!!

[James Wilcox]

Ok here is the deal. I am working an off market "deal". There are two triplexes for sale that each bring in $19,800/year per building.

$19,800 x 2 buildings = 39,600 Total Gross Rent

The seller in coming up with their asking price has used total gross rent instead of NOI in there calculation to determine their asking price! I can see where this could have easily been done by someone out the REI community, but it is a big difference in final price. The seller said they want to get a 11% cap rate.

This is a tricky situation. How is best to present a reasonable offer that will not offend the seller. I would like to keep the relationship open for future deals. 

The Seller is asking $340,000! 

A more reasonable estimation imo at the 11% cap rate is ~185.5K. That is an around ~150K difference! Will this guy even be able to swallow hearing such a difference in price? IK it is a just a numbers game, but how can I best approach without crushing his ego that much.

Any advice is greatly appreciated.