Ok, I have a seller that won’t budge…please help!!
4 bedroom house in a pretty good area. There are tons of section 8 tennants and the house is right next to a bus stop.
Original Asking Price: 78K
Negotiated Down To: 70K (I just countered @ 66,500)
4 Bedroom COMPS- 75-78K
Market- 63,600 (Very Low For Area)
Rents: 1000 - 1150
Taxes/Ins: approx 261 month
The owner has moved and just wants to get rid of it (so they say). I tried to offer seller financing, but they were against it. I don’t know if I presented it wrong. What would you do??
Personally, I would leave them contact information and tell them to contact me if they change their mind…
How much repair, if any, is necessary?
Is it a buy and hold?
How old is it?
I come up with about $920 in expenses, so it is my belief that this deal is a little thin…it is right on the edge if you keep maintenance and vacancy down and the rental price up at $1100+
The rents seem awfully high for such a low priced home. Also, what do the sellers owe? If the $3500 spread between your offer and their demand is enough to make or break the deal, I suggest walking. There’s always another one.
Yes, the rents do seem high but good for cash flow. It seems like we are dealing with more of a motivated buyer than seller. Course if you’ve figured out what you might pay with a mortgage at 8%, insurance, taxes, maintenance, vacancy, utilities, property management, and that comes out to good positive cashflow then personally I would take the deal. Who will be paying the utilities and how much is the electric, gas, water, water reclamation, trash disposal? Is the property in good shape now? Can you remind the seller that certain items need to be fixed and either he will have to fix before you purchase or you would have to take that off of the price that you are willing to offer.
I did a quickie on the numbers and, at 7.5% mortgage, 5% vacancy, 7% management (based on $1000 rental), the expenses were $920 (see my poast above)…with a $1000 income and $920 in expenses, the deal is “thin” as I indicated…if the income were $1150, the cashflow is a bit better…
Keith, sorry. I didn’t see your numbers above when I typed my post. The deal may be thin. Do you figure maintenance costs as a percentage of the home’s value or do you base it on Murphy deciding that a water heater will go out after 7 years, etc…?
In California an area with a lot of section 8 isn’t a good area. Make sure you know what your getting into. You could also call the local police department and see how much activity there is in the area.
The house doesn’t need ANY work and the section 8 tennant usually cover the utilities. I thought it was a close one too after running the numbers. I guess I am a motivated buyer! I really want to get this real estate business started…but everytime I find something that seems good, it usually isn’t.
I guess I need to be more patient and try to get more sellers to find me and not vice versa. I guess if they find me then they really are MOTIVATED SELLERS! Thanks for the advice again. I think
