Renegotiate or Walk Away? - First Deal

[Charles Giovanniello]

I'm currently under contract for a student rental house that I initially thought would CoC return ~20% annually. The ask was $130,000 and we negotiated down to $120,000 because initially my agent said that it would need a new furnace which was going to cost at most $4000. After the inspection however, it was pointed out that the house needed a new roof ASAP, there was some leakage in the basement, and the framing was also pretty unsatisfactory which resulted in the house sort of concaving inwards a bit, but the inspector believes it may have just settled there and only came up as moderate concern on the report. There were a few other issues such as electrical grounding on certain outlets, insulation concerns, and there were no smoke detectors. If i offer $95,000 for the house and take care of those repairs using $10,000 for the roof and $6,000 for the furnace, it will still return 15.3%, but my other concern is there will already by tenants in the house by the August 15th. Is this too risky with too many uncertain factors? Or could this still be a good deal if i buy it low enough and fix those large issues? Thanks!

P.S. this is my first ever real estate deal

[Nathan Platter]

Hey @Charles Giovanniello ,

You have an obligation to provide for yourself and your household. Sounds like the roof and other surprise costs like electric, insulation,... make it harder to profitably own and operate this house.

Don't have the seller fix the items, they don't have obligation to get the best contractors to repair the items.

Renegotiate the deal so that you feel like you win when they agree, and the seller will agree when they feel like selling is a good deal for them as well.