All Forum Posts by: Josh R.

A low offer isn't "just because". It is a combination of market value, property condition, and profit needed to make it a "deal". Many times that results in an offer that is embarrassing to make because in a hot market (such as DFW) even seller's of distressed properties think they are sitting on gold because the media has fed them that line every night on the 6 o'clock news.

If you aren't a little embarrassed by how low your offer is then you are offering too much.

You need more information first. 

What are the taxes on the property? 

Is the landlord paying any utilities or are they sub-metered to the tenants?

I would negotiate the deal based on the current condition and performance (current rent vs. what you believe market rent to be)

@Ben Leybovich will have more first hand knowledge of this topic and can likely provide some insight.

Hey @Shawn Thom how is this project coming along?

If she will do it, place a short contingency on your assignment contract allowing you to verify the numbers (rent rolls, bank statements, tax returns, etc.) Common sense would say she already has these documents on hand from the seller for you to review.

If she does not have these and will not allow a contingency...RUN

The north Dallas area is so hot right now it will hard to find such a property on the MLS. If you are doing your own marketing is a little easier but still tough. I am of the opinion that buying properties to hold in this area of town right now is not the best use of available capital.

There are other areas in DFW where you can meet the returns you want and still be in a good area (A/B) with good schools.

It depends on how the deal is structured. If you are close to 100% financed on the deal then $200 per door after all expenses are paid is pretty darn good. 

Example:

$100,000 SFR financed 100%

$1500 gross rent

$750 NOI (assuming %50 rule)

$535 mortgage payment

$215 net cashflow

That same property if owned free and clear would net $750 after applying the 50% rule because you would have no mortgage expense.

Many investors look for $100 per door assuming 100% financing and the 50% rule to quickly screen properties.

I believe the great @Ben Leybovich once said something along the lines of  "you  don't force a deal to meet the $100 per door rule by increasing your amount of cash in the deal. It is either a deal, or not."

@Account Closed 

1) I make no adjustment for corner lots. Many find this desirable.

2) It depends on the ARV range. Had one last year that we discounted 30-35k off the ARV for having an interstate about 50 yards from the back fence and that still wasn't enough of a discount.

3) Everything will sell for the right price...even something facing a busy street!

 Hoping your test comes back all clear. That one needed lots of foundation work so hopefully being mostly along the front of the house you will avoid most of the plumbing.