Telling yourself to drop out because its 120k is a way to "rationalize" leaving.

AllCash highlights a very valid math rationalization.

I feel like we were pretty much in the same boat - I would be able to house hack, commute was shorter, I had been looking for months and there was nothing that was "as good of a deal", and I was anxious to get my first property despite my gut feeling that it wasn't a good deal (I was doing everything to rationalize the deal rather than listening to wise advice and trusting the numbers).

The CMA he attached showed:Price by sq ft - $146, 250 ( low $34,778, high $239,598)Price by FCV ration $96,866 ( low $46, 610, high $174,176)Part of the issue is it is occupied and so until the tenants are out, they are unsure of the inside condition (it's also why they may have had issues selling it on the MLS).I ran the numbers on the fix and flip calculator and came with the following:Resale Value $100,000Purchase closing costs -$2000RE Agt fees for sale -$6,000Sales closing costs -$3000Monthly holding costs - $3000 (assumes 6mo holding at $500 per month)Rehab -$5,000Desired Profit $20,000Offer Price $61,000He then basically dismissed me (obviously too low for him to offer).  

Buy gold, bullets and MRE rations, and bury them in the backyard....it's call the Alex Jones Fund!!!!

So basically upgrade my $1m house to live in a $2m house for $0 extra It's really hard to make a rational argument to be a home owner vs. renter in SD. 

Again, that large of a cancellation fee is protection from slick owners - not rational investors.Good luck out there!  

You all will be glad to know that while more items have hit the fan since my initial post I have done well in giving an urgent yet rational response. 

Any feedback is appreciated on this one.Google drive link to full spreadsheet Cost and Revenue Assumptions List Price 550,000 Land 302,500 Building 247,500 Improvements 175,000 Closing Costs 4,000 Total 729,000 Number of Units 2 Average Monthly Rent 1,800 Other Income Gross Monthly Revenues 3,600 Operating Expenses Yr1 Electricity 0.3% 0 Insurance 11.9% 4,900 Water/Sewer/Garbage/ Electricity 3.9% 1,600 Property Taxes (On total value of property) 0.1% 6,086 Repairs and Maintenance 5.0% 2,052 CapEx 4.5% 1,850 Professional Fees 0.6% 360 Advertising 0.5% 210 Other 1.2% 0 Total Operating Expenses 11.8% 17,058 Expense Ratio 42% Net Operating Income 88.2% 23,982 Capitalization Rate 3.29% Operating Ration 58% Scenarios Gain on Sale Cap Rate Estimated Exit Price/ Gain On Sale - 1 Yr -4.7% (34,000) 5.50% Estimated Exit Price/ Gain On Sale - 2 Yr 0.1% 750 5.50% Estimated Exit Price/ Gain On Sale - 3 Yr 5.1% 37,238 5.50% Estimated Exit Price/ Gain On Sale - 5 Yr 10.4% 75,549 5.50%

Just document the numbers and give him a rational explanation of why the property is only worth what you are offering.