All Forum Posts by: Ernad D.

@Ben Leybovich,

The strike price (my max offer) would be $155K.  What advantage do I have in offering my max instead of increasing my offer in increments?  In case the seller has other showings/potential offers?  Please share your thought process. 

@Account Closed,

Thanks for the info - quite interesting. Please correct me if I am wrong, but it seems that the low GRM is a good thing for a buy and hold investor. This should mean a higher rate of return in income.

$20K seems a lot for new roof.  I have heard $5-10K is more accurate.

I would be at ~25% cash on cash return at $155,000.  That appears to still be a good investment.  Would you agree? 

@Account Closed,

After doing a little research, it seems cap rate may not be the best way to asses a fourplex. 

Why do you say this may not be a good place to invest? I thought that one would want a lower GRM. What GRM range do you aim for and why?

I used 600/mo rent just to be safe, I expect rents to be between 620-650/mo.  It seems that you believe the property is actually worth more than $155K.  Please explain why.   What would you say is the fair market value of this particular property?  What would be your max offer?

@Account Closed, the county assessed value is $112K, however, the seller put on a new roof and gutters on the building and the garage in 2014. 

Similar fourplexes in the same neighborhood recently sold for $130-$140K, but were not in as good of a condition as this property and needed the roof replaced. 

I look forward to your response.

Thank you

@Travis Washington 

I found the spreadsheet here on BP:

http://www.biggerpockets.com/files/user/brandonatb...

@Jeff Hendley,@Brent Coombs, @Austin Stanton 

The seller just countered my offer of $144,000 at $167,500, coming down just $2,500 from list price. They want a response by tomorrow. This is discouraging as I thought they would meet me somewhere in the middle on their counter. My agent is saying they have another showing this week so the seller may be feeling comfortable. An interesting piece of information is that they pulled in all the dates along with closing date in their counter offer and even called my bank to see how quickly I could close. Seems like the seller is in a rush to sell, but only at their price. My max offer would be $155,000, which would give me a nearly 11% cap rate (not considering debt payments) and a 25% cash on cash ROI.

What amount should I counter with?  I am looking for advice to see through this negotiation. 

@Jeff Hendley, thanks for the advice, countering in $1-2K increments is very smart.  I was not initially planning on countering in $1-2K increments because I did not want to annoy the seller but you're absolutely right, we make money when we buy, even with a buy-and-hold strategy.  I still do not have my maximum offer set in stone, but am thinking $148-150K.  What are your thoughts?

@Brent Coombs, my current offer of $144K is at 11.5% cap rate. If I were to close at $150K, that would be a cap rate of 11%. I am using the "Cap rate = net operating income / price" formula (NOI does not consider debt payments). After debt payment, the cap is roughly 6.5% at $150K. The best deals over the past few years on similar properties in the neighborhood was at 7% cap after debt payment, but those properties were not in as good of a condition.

The appeal is that this property will net me nearly $200/mo per unit (will eventually exceed as rents increase) and is a well maintained building that will not need any major capex improvements for a long time.  It was just listed a week ago and the owner is trying to get out of the business because she is tired of landlording.  That being said, I am fairly sure that the seller will not entertain my next offer being less and that this property will sell quickly.  What are your thoughts?

Dear BP community,

I just made an offer on a fourplex and am looking for negotiation advice.  The property is in really good shape and had a new roof done on 2014.  The area is a B- neighborhood so it will not be too difficult to find tenants but the appreciation will be minimal.  The seller listed it at $170,000 and I just made an initial offer of $144,000.  

How do I negotiate once the seller counters?  In what amount increments?  What amount should I set as my max offer?  Any other advice?  Please see the following for more details.

Thanks for the feedback @Brie Schmidt, however, the walk price is what I am not sure about. 

Based on the information I have provided above, what would your walk price be?  I do not want to overpay as I cannot count on appreciation in value for this property due to the area.  

Dear BiggerPockets community,

I am looking for feedback on a just listed four family property in a less than desirable location (C neighborhood) with some criminal activity.  Building is 60 years old but in decent shape, roof to be replaced in 5 or so years.

Each unit is two bedroom at $550 rent/mo - fully rented, separately metered.  Tenant only responsible for gas/electric.  The property is listed at $110,000 and I would NOT need to do any immediate rehab.  However, it is in a flood zone so insurance would be higher.  Financing would be 25% down payment plus 30 year mortgage at around 4.5%.  At this time, the current owner is not providing expenses, vacancy history, tenant details, repair history, etc.  I am sure once we made them an offer that their answers would be more forthcoming.  

I did find out that this property is being sold due to a dissolving partnership and the price is negotiable, but not a fire sale.  Also, the current owner bought this property for $70,000 in 2013.  

Based on this and below information, I was thinking about making an offer of $80,000.  What are your thoughts, BP?  Is this too low/high?  What else should influence my offer?  I look forward to your responses.

Information from listing:

Information from WinGIS:

Hi Jennifer,

There is significant value to an investor group and I would be interested in actively participating if one were to meet in the Rockford area.