All Forum Posts by: Brian Zitzow

So I just got off the phone with my realtor. I want to write an offer for 245k on a duplex that is in probate and asking 350k. He was shocked. He said he "knows it is worth at least 320k". It's tax assessed at 315k in 2015. 

However, the only way I could make the numbers work was to offer that amount. Yeah, I'm in California. Yeah, I realize people will probably pay more in California, but the numbers have to work for me. 

He had a meeting and said he'd call me back, but I got the impression he doesn't even want to write the offer. "I can tell you right now you're not going to get it."

Does this mean that in the market this sample data was taken from that in the month of 12/15 the average home for sale had an asking price of 460k but the average home sold was for 336k (73% of the asking price)?

So at first I thought this meant on average a home sells for ~27% less than asking price. However, after thinking about it more, I realized that it could be high priced homes on the market that are not selling, driving up the average of "For Sale" price, while lower priced homes in the market are selling, driving down the "Sold" price. In which case, I'm not sure if this data is really telling me anything useful.

Do you see anything useful here?

Now that I am ready to talk to sellers about specific properties, I'm looking for some feedback on the due diligence process.

At what stages do you do which due diligence?

I did a search on the bigger pockets site for "Due diligence" and "buy and hold due diligence" and there is so much information I couldn't find sift through it all. Here's what I came up with. 

Is there anything I am missing?

Paper Due Diligence

• deed to the property
• a copy of their insurance policy
• copies of all tenants’ leases
• current title report
• a recent real estate tax bill
• bank statements (really? Is this to prove the income?)

Property Improvements

The last time any of the following was repaired or replaced:

• Roof
• Water Heater
• All Appliances
• Driveway/Parking Lot
• HVAC
• Flooring
• Plumbing
• Windows
• Paint
• Cabinets/Counters
• Structure (foundation, framing)
• Components (garage door, etc.)

Also, should I ask for this stuff before I even see the property so I can evaluate it with real numbers? At what point do you request these items?

 I'm confused. Why can't I live there?

Are my costs off?

 I think that may be true here, but after looking at the numbers - I'm truly wondering: Who in their right mind would buy this thing for asking price? haha

 Actually, both sides are rented right now. One for 1050, one for 950, which puts gross rents at 2k. I cannot get the 4k gross rent by renting both sides like you suggested. :(

Thanks!

@Julia Dugger Actually I would like to buy it owner occupied. It's my first investment and I can take advantage of 3.5% down if I owner occupy. 

Also, what is First Look? And do I find the listing agent by signing up for the alerts and waiting? 

So I found a duplex in a desirable neighborhood in my area and I want to run the numbers by you guys.

Asking Price: 350k
Gross Rent: 2000

I can do owner occupied financing with 3.5% downpayment and I'm assuming a 4% interest rate on a 30 year fixed. Property taxes in California are 1% of assessed value, and this property was previously assessed at 347k.

If I offer 200k on it, it's WAY negative. I can offer 95k on the property to get it to cash flow $100 per unit net income. Are my numbers WAY off or WTF? Who the hell is going to buy this thing???????????????

Can I get a sanity check on my expenses?

At 95k it pencils out:

At 200k (150k below asking price) I'm -$295.94 a month NET cash flow:

I am using general estimates for my CAP EX costs. I realize this could be off, but even if I didn't account for CAP EX at all I couldn't make it positive cash flow at 200k purchase price

@Jeff Robert I have found the original owner's name and address. Should I call them directly? The woman at HubZu told me it's already been foreclosed, which I thought meant Fannie Mae owns it now. Am I understanding this correctly?