I’m meeting with the seller and not sure how to negotiate this deal. The type of renter these houses will generate will be lower end renters. Renters on HUD etc. The houses aren’t in the best neighborhood and the seller makes only the improvements needed to pass inspection. They don’t need any work but probably won’t appreciate much so I’m primarily after cash flow.
The seller and I will be sitting down on Saturday and seeing if we can come up with a deal. The seller has retired from his job and wants to sell his rentals–he seems motivated to sell. Said he would be able to give me a better deal if I was able to purchase more than one property.
Property #1: an up/down 2 bed up/down duplex and the owner pays the heat/electric/water/garbage. This property was a sfh turned into a duplex. It’s an older building but the furnace is newer and the electrical has been updated. Part of the roof needs new shingles. The bottom unit rents for $650 and the top for $625.
Taxes : $57
Insurance: $60 (est and this may be high)
Total Income: $1275
I believe I could purchase this property for around 30K.
Property #2: Older 3 bedroom home. Doesn’t need any immediate work done. Has an older furnace and water heater. Electrical has been updated. Rent is $595. I think I could purchase this house for around 25-30K.
Property #3: Smaller 2 bedroom/2 bath home. New furnace, water heater, electric update. Roof is good. Rents for $495. Purchase price would be around 20K
Property #4: Seller said he really wants to sell this one–might be able to pick this up cheap. My wife doesn’t think we should buy it because of the neighborhood it’s in. Rent is $550. Seller wants around 25-30K.
I work with a small local bank and would be able to get conventional financing. My terms are generally around 10% down, depending on what the properties appraise for, and 5.5% interest over 15 years.
I would appreciate you experienced investors helping me determine a purchase price that makes sense.