My first offer

Well I sent my first Letter of Intent.

It was very low and I knew it would not be accepted.

ARV = $360,000 - conservative estimate
Original Purchase Price = 369,000
They dropped to $325,000 (conversation I had with realtor about a week and half ago).

Situation - seller is out of the home, no mortgage (checked at public access records) house is left like a hell hole, with tons of “stuff” - junk, literally filling the house.

My offer:
179,000 with 5k down (I would use a traditional mortgage loan - maybe interest only loan) - I put in the letter of intent, that seller could leave ALL unwanted crap and all current damages as is - that I would take care of them - thus relieving seller of having to clean up the home in anyway - they haven’t for years so I figured maybe this would seem at least somewhat appealing.

I got an email back from realtor stating quite coldly:
Seller does not want to counter.

So sent realtor an email saying basically - my offer stands and is negotiable. If seller wants to sell home, it might be good idea if you actually broker a deal (do what you’re eventually going to get paid to do!) and speak to seller. I informed him that I hope he could communicate with seller that this is not personal, that it is business.

Anyhoot, my second offer will be:

215k - with seller financing to include holding a note for 6 months.

We will rehab, then refi at 70% LTV- pay off seller and rent it

at 70% LTV - mortgage will be around 252,000
Monthly mortage - $1900

Rent for homes run about that much - so it would be break even situation or very little cash flow.

Second option is of course - refi for as much as possible and then just put it up on market to sell.

Oh by the way, my offers were based on
$30,000 in repairs (very generous estimate)
$7000 for holding expenses etc.

2nd deal: ARV 360K X .70 - repairs/holding costs = 252k

At least you heard from the realtor. Lots of times they never return with an answer with my intent. Go figure (guess they didn’t like the “figure” they got for their commission with my proposal). Most of the time, like you, I figure they didn’t even tell the seller tho’ required by law.

like you the Realtor is only conducting business. his or her interest is to get the highest and best offer for her client. she has no obligation to you what so ever. her client may have instructed her to repsond in that way. i have had sellers who i could not fully respond the way they wanted me to, some obscenities thrown, at low ball offers. she was probably being as nice as possible.

Thanks for the feedback. I think it is completely assinine for a realtor to not forward all deals (aside from it being there legal obligation) to the seller. And furthermore, I think it is totally backwards to not encourage a seller to counter EVERY OFFER. Even if it is just to counter with the same exact asking price.

That’s why they call them “brokers” - they’re broke because of their own stupidity.


If the property is free and clear why not work your numbers to see if it might be better for you to OFFER more with seller financing at a LOW interest rate.

We once offered MORE than asking price on a duplex. We asked that owner carry loan at ??% which was way lower than any mortgage I could get. We offered only 5% down. They came back with everything we wanted except for the down payment. They wanted 10% so we declined.

Anyway, you see how checking the #'s on a mortgatge vs a low interest rate from the seller may actually benifit you with lower monthly payments. For us it was all about cash flow.

Great idea and good creative thinking.

TMCG, you need to look at the other side of the coin. As stated the listing agent is obligated to show every offer and advise the client what is best for the client. Selling at some (low) price you offer might not be for their client. Moreover, it is not uncommon in the situation where the person owns the property free and clear to not take an offer that is low. They have no motivation as it cost them next nothing to wait 1 month, 6months, 1 years to get the right price for them. They could care less about your calculations, etc.

Having sold quite few properties (never junk heaps, however), I always set a lower limit below which I just don’t even counter.

You can not force people to negotiate and futhermore if you attempt to do so, you run the risk of pissing them off and not be able to play 2nd or 3rd rounds with them (such as the suggestion to ask for seller financing).

I have had some deals where it took up to 6 counteroffers back and forth over >2 months to finally get a contract in place.

Patience, my friend :wink:

TMCG let me ask you. What is the most you could comfortble offer for the house and still have it be profitable?

Did you know you can request to present your offer directly to the seller? That is where you find their needs and work a deal in person.

I had a client refuse to counter on a low offer too. People are too easily offended. It’s just math, not an assault on your pride. I said just counter 1k below selling price to keep a dialogue going… NOPE!

That’s the way it goes.

Patience is a virtue. I flew off the handle there.

anyhoot, you asked:
TMCG let me ask you. What is the most you could comfortble offer for the house and still have it be profitable?

Did you know you can request to present your offer directly to the seller?

  1. It depends. If I base it on the rents in the area, assuming it would rent - Then monthly payment of $1700, comfortably.

But, I’m starting to learn that local towns DO NOT make it easy for investors to rent properties residentially - single-families.

So, maybe if it will take saaay, 6 mos to get appropriate permits…well then I can COMFORTABLY handle - 1500 a month - If LLC had to eat the payments…

So, I guess having the seller hold a note for 6 or 9 months, might be the way to go, with this property.

I’ll rework my numbers and see what I can come up with.

The house is still available!

Thanks all…

Oh and I didn’t know you could request to present your offer directly to the seller. How do I do this, put it in the letter of intent?

To present your offer to the seller, you tell his agent. It could be beneficial to have you own agent in this case, though.

And I meant what is the max you could BUY the property for comfortabaly?

How do local towns discourage SF Home rentals? I haven’t come across that.

call the town of islip - 631 5691 - ask about ordinances for owning SF rentals. The ordinances and the process to get the permits are meant to discourage it. That’s Long Island for you… people complain about rentals, how they look, who lives in them…and wham, the town makes up all these rules that make owning SF rentals - one big pain in the axx.

on the other note, i guess, comfortably, LLC could handle about 800 a month for 8 to 12 months…

Wow, TMCG,

I’ve asked the question twice and you failed to answer it both times.
Am I asking it wrong??? I keep asking what the most is you can comfortably offer to buy the house for and still make a profit and you answer with a monthly payment.

I am trying to help with some math but I have to have some of the numbers to do the work.

I can’t think of a 3rd way to ask the question but here goes.

What is the most highest, best price you can buy the house for and still make a comfortable profit that is within your profit criteria. ???

Highest. I’m asking highest… not what you want to pay… but the most you would pay… and make a profit… excess cash over expenses… and I’m not asking for a monthly payment. I am asking the price of a house…

like 225,000??? or 315,000???.




well, it depends on the goal of the purchase.

if i can have the seller engage in some good sound creative financing, then i’d pay as high as 300k

in this case above, i would hold the property and rent it and thus make a modest cash flow of about 200 a month - educated guess.

if i can’t do too much seller financing or the seller wants all of their money in like 6 months - i’d put a for sale sign on property while i started to do my repairs, asking 350k firm…
if i did repairs and it didn’t sell within first two months, i’d just refi, pay off the seller and continue to aggressively sell it.

so based on this goal of purchase - i’d probably go as high as 220k

so it’s 220k or 300k, depending on goal of purhase - comfortably.

ARV = 375k (conservative by market analysis - most props on street and ajoining streets have sold and are listed at or above 399k - all are similiar lot sizes and house structures.

I’m going to work up another proposal tonight as a matter of fact. help me out, email or post here.