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My offer was actually $25,000 below his asking Price. This is a currently a FSBO deal. If the seller cannot sell in another month, he is going to list it with a Realtor. In this case, he's going to end up spending over $12,000 in commissions, so I'm sure we'll eventually come to an agreement, considering there is now only $20,000 that separate us. $12,000 in commissions if he would decide to go with a Realtor, plus $5000 allowance for the roof and there is really only $3,000 separating us now. Hopefully sooner or later he will get the picture.

I agree with TC, I have received a couple of quotes to tear off current shingles and replace for between $4500 - $5500.

Yes, I do realize that I may get 10 years out of the roof, or I may only get a couple. So, if I get a $5000 allowance from the seller to fix up the things that need to get fixed, that is paid at the time of closing, and I can use that money on whatever I want, correct?

I'm currently working on purchasing a duplex. I have made an offer, and the seller has countered. The duplex will probably be in need of a new roof in about 5 years. The seller has mentioned a couple of times, that if there are things I think need fixed, that he would be willing to offer allowances for them. What is the advantage, to the seller, of offering an allowance over just taking that same amount off the selling price. For example: why would he offer a $5000 allowance towards roof repair instead of just taking $5000 off the selling price? Is there a tax advantage or something?

A new roof certainly would be nice, but if it still has 5 years of life left in it, then I would prefer to get 5 years out of it, instead of getting it replaced now.

According to his numbers, yes 50% is what he's using for operating expenses. Are they really this high? What are you all considering operating expenses?

Mwarden, Yes, I do expect to have negative cash flow while I am living there. I am currently renting, paying $610/month. I'm not looking to live somewhere for free, although it would be nice.

MikeOH, I was wondering how you figured $675 for operating expenses? This seem like a very high figure. Is that based on experience?

For the long haul, I'm not necessarily looking for cash flow, but more at building equity.

Thanks for your help,
Jason

I guess my question was not really about the numbers. It was more about the steps that need to be taken to complete the sale. Does a real estate agent really do much beyond finding/showing houses and writing up the purchase agreement?

I plan to offer $145,000. One unit is currently rented $675/month, the tennant's rent has only increased $25 in 6 years. As I said before, I plan to live in the other unit. Each unit is 2 bdrm. with a paritally finished basement that could be finished to add another bedroom (Egress windows already there). This wouldn't cost too much and should be able to bring in another $100/month in rent. Location is good, walking distance to a college, but yet still in a quiet neighborhood. Owner told me he'd actually never rented to college kids in the last 7 years.

I have found properties that are $20,000 cheaper, but they are not in as nice of shape as this one. I plan to live here at least 5 years, so want something that fits my tastes. After that, I plan to hang onto the property as an investment.

Thanks for your advice.

I have been searching for a duplex for around 6 months to do an owner-occupy to begin Real Estate Investing. I have just found one that I'm interested in. It is a FSBO. I currently have had a realtor who has showed me a few properties. The seller of this FSBO property has expressed that we could both save some money by not bringing in a Realtor. Do you think I need one? I've done quite a little bit of research, but am a little bit uneasy. His asking price is more than I had initially been planning on spending so I'm looking to cut corners where I can to make my offer the most attractive to him. The property has only been "on the market" for about one week.

Any fellow investors in the Lincoln, NE area?