All Forum Posts by: Paul Sung

I agree about the countering back part. In retrospect, not the smartest thing but live and learn. Based on my analysis the pricing would have came to <$400 sq ft which is atypical for the area I’m in. Based on that - and a myriad of other reasons - I thought there was some wiggle room. My question now really is, is this the right perspective? Is the dollar per square foot the only relevant calculation. I’m in the east bay both units were 2 bd 1 br.

I offered $525k because my agent told me she expected the price to go higher. He responded with $565k for a counter. I was able to get him down to $525 before asking him for a final reduction to $500, which led him to break it off.

Background. 29. Single no kids. 80k annually. Currently have a mortgage. Good credit.  California Bay Area. I do not have any real estate specific skills, but I work in finance so I'm reasonably comfortable with numbers. I also do not have the cash to do large flips - though I have equity. My goal is to build a small portfolio whereupon I can retire and draft rental income.

I was recently making an offer on a turnkey duplex. The property in question was 1230 sq foot. One unit was rented for $2100, and the other was about to be. Both units are roughly the same. This comes about to $4k which is significantly greater than my expected mortgage payment.

The seller's asking price was about $475,000.

Based on the seller's asking price and 475k/1230. The seller's asking price was about to $380 sqfoot which is high. I sent an offer for $525, and the seller with $565. Ultimately he came down to $525k, whereupon I told seller that I wanted to think about it before offering $500k at which point the deal was dead.

My questions are as follows:

1) I was very conscious of the price point. Yet the cash flow is so high. Is there a mathematical way for me to bridge the difference? In essence, would the high cash flow have offset the higher price?

2) I am very conscious of an economic down turn. How much of a margin should I build in to account for bad things happening? 

3) Should I have accepted the price for $525k? What details am I missing to make a more informed decision?

4) Does the fact that it's a duplex change the calculation of $ sq/ft? Should duplexs be priced at a premium, no premium or negative when compared to a SFH of similar size?

Thanks in advance to my BP family.