FSBO priced to break even. How would you approach owners?

[Amanda G.]

Two separate buildings on one property. A nice 2/1 SFH and a 1/1 above the detached garage. Rent has been $700/$400. I think $800/$400 is doable. The owners have had it 14 years, and are looking to "simplify" their lives.

They are asking $125,000, which with a 30 yr mortgage 25% down is a return of 2.5%. 

Playing with the numbers, 

100k is 6.7%

95k is 7.9%, 

93k is 8.4%

When an owner has a property priced like this, how do you approach it? It has been on the market about 5 months. They obviously don't urgently need to sell. What would you do to increase the likelihood they would entertain an offer?

[Jonathan Holmes]

I would say it is probably just not a deal.

However, if you could offer all cash, wave all contingencies and a quick close they may decide to take a lower offer.

In order for me to get excited I need three things from a seller. Motivation to sell (taxes, inheriting the property etc), close to correct pricing ( if they value the property at 100k more than I do we can’t deal), and a reason that the owner occupant market is uninterested (needs work, to many units). For every one of these that are missing it’s hard to make a deal.

Working with this criteria I would say your suspect property is not a deal. There is little to no motivation. They value the property higher than you do and being a SFH with a mother in law suite the owner occupants will consider bidding on it.