All Forum Posts by: Ernad D.

Just a quick update for you guys:  My agent told me that another offer was accepted when I tried to put in a bid of $160K.  I don't know what the offer amount that was accepted was.  Perhaps I should have gotten to $160K sooner, but that's a lesson learned.  Now back to the drawing board.

@Frank Chirkinian,

5% vacancy rate, capex, utilities, and maintenance is included in this number.  I do my own property management so I do not include that expense.

I have just fine tuned some numbers, such as vacancy rate % and rent per unit. The following is my buy and hold cash flow calculation. Results are $10K annual cash flow and 15.59% ROI per year.

Roy,

Agreed.  However, the seller for some reason seems to have shifted from must sell now to finding tenants and waiting for the right offer.  Also, it doesn't seem the seller will counter my offer at all.  

Either way, I will just wait a bit and if I hear nothing in the next week, I may just submit a final (this time I mean it) offer of $160,000.

Eddie,

Thanks for the input.  I did research via both craigslist and rentometer, and $675 is on the high end, but still realistic.  The only reason I used lower numbers to do my analysis is to create a safety buffer.  I truly feel that even at $160,000 this would be a good deal (based on location, condition, improvements, etc).  I have second thoughts because I am looking for the perfect price, not just a good price.  

Update:  

The seller will not go down to $155K and did not even counter.  Not sure if this was a good idea, but I drove past the property last night and the seller has a sign and brochures out for rent at $675/mo.  My calculation is based on $620-650/mo rent. 

I am seriously considering submitting an offer of $160K, but am not even sure that will be enough now.  Jeez, I don't want to offer $160K, be countered, and end up $10K above my strike price... 

I am certainly leaning towards submitting an offer of $160K and make it my max no matter what, even if the seller counters within a few thousand. 

Gentlemen, any thoughts?

@Account Closed, @Brent Coombs,

I do not want to question my strike price, but at the same time, I don't want to regret losing this deal over a few thousand because the investment will still offer similar returns in this price range.  The issue is that if I go over my strike price by a few thousand and the seller asks for another few thousand or more, it will be difficult to just walk away and I may end up paying more than I should.  My thought process is that even though this is a buy and hold, I need to buy at the right price for exit strategy purposes. 

I probably seem unreasonable to the seller based on my offers so far, but it should not change their willingness to make a deal if we can get to a certain price.  The psychological aspect is definitely a good point and I may have played tricks on my own mind by over analyzing.  That being said, the current situation is that my realtor submitted my offer of $155,000 yesterday and now all I can do is wait for the seller's response.  Hopefully that is soon. 

@Jeff Valentino, @Ben Leybovich, @Roy N., @Austin Stanton, @Brent Coombs

You guys are completely right, I have to stick with my analysis!  I have asked my realtor to submit final offer at $155,000.  

There will always be another deal if this one does not work out.  Thanks for all your great feedback!  The BP community is truly awesome.

@Jeff Hendley, @Brent Coombs, @Austin Stanton, @Account Closed, @Ben Leybovich, @John Casmon, @Roy N., @David Avetisyan, @Jeff Valentino, @Joey Dwyer

Gentlemen,

An update:  I have asked my realtor to counter at $148K and seller now feels we are just too far apart and decided not to revise her last counter offer of $167.5K.  According to her agent, she sees me as trying to get it in the 150Ks and she wants something in the 160Ks. 

The actual market value of the property is 165K-170K, but as investors, we want to make money when buying.  Should I just submit my max offer of $155K and go no further?  I would hate to lose the property over a few grand.

On the other hand, my monthly mortgage payment will not change much over $5K, so the cash flow will not change much.  This property will be a buy and hold long term investment.  Am I being unreasonable at $155K?  Should I go up to $160K?

What are your thoughts? Any advice?

Thank you

@Joey Dwyer, @David Avetisyan - they are selling the property 'as is' and have crossed out the seller's warranty portion on their counter offer.  That being said, I will not be able to negotiate during inspection period and must agree to a price beforehand.

I am not 'in love' with this property and will only invest if the numbers work out, however, I have been searching to buy a property for a few months now and this is certainly the best deal so far (great income, area, property condition, etc.), as long as it is at the right price.

I have asked my realtor to counter at $148K, make it clear that I want the property and will move as quickly as possible to close the deal, and to tell the seller to be serious if they want to make a deal.

Let's see what happens. 

@Ben Leybovich - After doing some research, the property appears to have been inherited via deed in trust last month.  That being said, I imagine the seller has a lot if not 100% equity.

@John Casmon - I know that the property has just been listed and the seller is in a hurry to sell because they don't want to deal with landlord responsibilities.  Also, two leases expire at the end of this month and tenants are moving, leaving three vacant units beginning July 1st.  

@Roy N. - "Always slow the game to your speed and control the puck!".   This is great because I definitely felt pressured to move faster after my realtor told me they had another showing scheduled. 

This is my second property I am purchasing. I actually bought a fourplex in the same neighborhood back in 2012 as a short sale directly from the bank for $135K. It was not in as nice of a condition and the roof was not new, needs replacing soon. However, it has been a good cash flow property at around $9K NOI/ year.

@David Avetisyan - Agreed, I don't want to play too much ping pong.  My thoughts were to submit one offer tomorrow at $148K and then one final offer afterwards.