I'm Buying another Investment property, what should i offer?

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  • hyper
    Confirmed User
    • Mar 2002
    • 5294
    #1

    I'm Buying another Investment property, what should i offer?

    4 - 2 bedroom Apts

    locally rents between $550 and $600

    they are asking 162,500
    assesed at 147,000 for tax purposes

    what should i offer?

    1 rented unit
    3 vacant units

    i have 4 other properties but i inherited them. so i never actually had to buy one.
    Last edited by hyper; 06-14-2004, 03:06 PM.
    Tags: None
    • airpal
      Confirmed User
      • Jun 2004
      • 113
      #2
      Only one rented unit?! I hope you've checked out the place very thoroughly as to know why they currently have 75% vacancy. Also, you should make an extremely low offer, because using a cap rate and NOI, the property would be worth next to nothing since it's an income-producing property.
      Last edited by airpal; 06-14-2004, 08:30 PM.

        Comment

        • GTS Mark
          Vrume Mark
          • Jan 2001
          • 20912
          #3
          Wow 4 plex for that amount that sounds awesome!

          I would go in lowball at say $140 and work your way up from there. Make sure you put in your conditional offer based upon home inspection, financing and environmental assessment.

          Good luck!

          DH

            Comment

            • hyper
              Confirmed User
              • Mar 2002
              • 5294
              #4
              Originally posted by airpal
              Only one rented unit?! I hope you've checked out the place very thoroughly as to know why they currently have 75% vacancy. Also, you should make an extremely low offer, because using a cap rate and NOI, the property would be worth next to nothing since it's an income-producing property.
              it is an absentee owner with no property manager
              they evicted the other tenants for non payment.
              i spoke to the tenant and got the scoop.

              It just needs to be managed properly.
              I had to hire a property manager for the properties I inherited, so im good.

              My realtor says the property is underpriced as it is.

              so we're gonna start at 150k

                Comment

                • GTS Mark
                  Vrume Mark
                  • Jan 2001
                  • 20912
                  #5
                  Originally posted by hyper
                  it is an absentee owner with no property manager
                  they evicted the other tenants for non payment.
                  i spoke to the tenant and got the scoop.

                  It just needs to be managed properly.
                  I had to hire a property manager for the properties I inherited, so im good.

                  My realtor says the property is underpriced as it is.

                  so we're gonna start at 150k
                  If you don't want it, let me know!!!

                  DH

                    Comment

                    • hyper
                      Confirmed User
                      • Mar 2002
                      • 5294
                      #6
                      Originally posted by DrinkingHard
                      Wow 4 plex for that amount that sounds awesome!

                      I would go in lowball at say $140 and work your way up from there. Make sure you put in your conditional offer based upon home inspection, financing and environmental assessment.

                      Good luck!

                      DH
                      yeah DH, will do. if everything goes through and you need a place.. just let me know

                        Comment

                        • Makingcoin
                          Confirmed User
                          • Aug 2002
                          • 8919
                          #7
                          $87,542.56

                          www.MAKINGCOIN.com
                          icq. 166-662-831
                          "Start making large coin!"

                          Daddy I Get Paid To Be A Whore - Coming Soon

                            Comment

                            • m00d
                              So Fucking Banned
                              • May 2002
                              • 3129
                              #8
                              Originally posted by DrinkingHard
                              Wow 4 plex for that amount that sounds awesome!

                              I would go in lowball at say $140 and work your way up from there. Make sure you put in your conditional offer based upon home inspection, financing and environmental assessment.

                              Good luck!

                              DH
                              thanks captain obvious

                                Comment

                                • hyper
                                  Confirmed User
                                  • Mar 2002
                                  • 5294
                                  #9
                                  Originally posted by Makingcoin
                                  $87,542.56
                                  they paid 134k for it in 1999

                                    Comment

                                    • Makingcoin
                                      Confirmed User
                                      • Aug 2002
                                      • 8919
                                      #10
                                      Originally posted by hyper
                                      they paid 134k for it in 1999
                                      Sorry, offer $84,541.87 instead.

                                      www.MAKINGCOIN.com
                                      icq. 166-662-831
                                      "Start making large coin!"

                                      Daddy I Get Paid To Be A Whore - Coming Soon

                                        Comment

                                        • m00d
                                          So Fucking Banned
                                          • May 2002
                                          • 3129
                                          #11
                                          how motivated are they to sell?
                                          sounds like a case of glad to be rid of it

                                            Comment

                                            • hyper
                                              Confirmed User
                                              • Mar 2002
                                              • 5294
                                              #12
                                              Originally posted by m00d
                                              how motivated are they to sell?
                                              sounds like a case of glad to be rid of it
                                              its been on the market 4 days
                                              we'll see how motivated they are when we submit our offer.

                                              actually the other 4 houses i have are in a crappy neighborhood, but with section 8 i make a killing on them
                                              Last edited by hyper; 06-14-2004, 08:53 PM.

                                                Comment

                                                • latinasojourn
                                                  Confirmed User
                                                  • Oct 2003
                                                  • 3191
                                                  #13
                                                  unless you're going to live in it, rental property value is based strictly on ROI, throw emotion to the wind.

                                                  there are many factors to consider, such as:

                                                  1. location
                                                  2. any rent control ordinance now or proposed
                                                  3. neighborhood change factors---is neighborhood improving or declining---who's moving into neighborhood, is city population stable, increasing, or decreasing.
                                                  4. your current tax situation
                                                  5. what maintenance is required now to getting ready for rent-up
                                                  6. quality of financing
                                                  7. true rental or lease value to compute gross multiplier, and comps (you need true data on comparable sales in the vicinity---which can be found in MLS)

                                                    Comment

                                                    • GTS Mark
                                                      Vrume Mark
                                                      • Jan 2001
                                                      • 20912
                                                      #14
                                                      Originally posted by m00d
                                                      thanks captain obvious
                                                      Hey Mood, how many places do you own?

                                                      I own 6 and am working on number 7.

                                                      Some people do not know these things and maybe appreciate that I am telling them. It could save them a lot of time and money down the line.

                                                      Like the guy said he inherited the other properties and this is the first one he has bought.

                                                      So

                                                      DH

                                                        Comment

                                                        • m00d
                                                          So Fucking Banned
                                                          • May 2002
                                                          • 3129
                                                          #15
                                                          Originally posted by hyper
                                                          its been on the market 4 days
                                                          we'll see how motivated they are when we submit our offer.

                                                          actually the other 4 houses i have are in a crappy neighborhood, but with section 8 i make a killing on them
                                                          i have a house i havent been able to sell for 4 years now. ive thought about renting it (it's in an AWFUL neighborhood) but figured it'd be more trouble than worth. section 8 looks good though

                                                            Comment

                                                            • m00d
                                                              So Fucking Banned
                                                              • May 2002
                                                              • 3129
                                                              #16
                                                              Originally posted by DrinkingHard
                                                              Hey Mood, how many places do you own?

                                                              I own 6 and am working on number 7.

                                                              Some people do not know these things and maybe appreciate that I am telling them. It could save them a lot of time and money down the line.

                                                              Like the guy said he inherited the other properties and this is the first one he has bought.

                                                              So

                                                              DH
                                                              3 currently
                                                              I wish it were 2 though ;)

                                                                Comment

                                                                • hyper
                                                                  Confirmed User
                                                                  • Mar 2002
                                                                  • 5294
                                                                  #17
                                                                  Originally posted by latinasojourn
                                                                  unless you're going to live in it, rental property value is based strictly on ROI, throw emotion to the wind.

                                                                  there are many factors to consider, such as:

                                                                  1. location
                                                                  2. any rent control ordinance now or proposed
                                                                  3. neighborhood change factors---is neighborhood improving or declining---who's moving into neighborhood, is city population stable, increasing, or decreasing.
                                                                  4. your current tax situation
                                                                  5. what maintenance is required now to getting ready for rent-up
                                                                  6. quality of financing
                                                                  7. true rental or lease value to compute gross multiplier, and comps (you need true data on comparable sales in the vicinity---which can be found in MLS)
                                                                  yeah. after the first post. my realtor called back and said it was a great deal.

                                                                  providing the property is up to par
                                                                  i do expect to have to do some prep.
                                                                  as i did the others.

                                                                  like i said. i just wanted input on the initial offering.
                                                                  i'm pre-approved (not pre-qualified) for the mortgage on it

                                                                    Comment

                                                                    • hyper
                                                                      Confirmed User
                                                                      • Mar 2002
                                                                      • 5294
                                                                      #18
                                                                      Originally posted by m00d
                                                                      i have a house i havent been able to sell for 4 years now. ive thought about renting it (it's in an AWFUL neighborhood) but figured it'd be more trouble than worth. section 8 looks good though
                                                                      four two families with 3 bedrooms each

                                                                      hud rent is $858

                                                                      u can do the math


                                                                      if u want to see what the hud rent is in your area
                                                                      http://www.huduser.org/datasets/fmr/...F/2004map.html

                                                                        Comment

                                                                        • m00d
                                                                          So Fucking Banned
                                                                          • May 2002
                                                                          • 3129
                                                                          #19
                                                                          Originally posted by hyper
                                                                          four two families with 3 bedrooms each

                                                                          hud rent is $858

                                                                          u can do the math


                                                                          if u want to see what the hud rent is in your area
                                                                          http://www.huduser.org/datasets/fmr/...F/2004map.html
                                                                          these people get to choose what house to live in, why would they choose a warzone neighborhood? am I mistaken? how do you snag these sec.8 renters?

                                                                            Comment

                                                                            • beemk
                                                                              CLICK HERE
                                                                              • Jan 2002
                                                                              • 20829
                                                                              #20
                                                                              real estate is a buyers market. take the price they paid and add enough to cover realtor fees and closing costs they may have paid and add mabye a grand and theres your offer.
                                                                              I host with Vacares

                                                                                Comment

                                                                                • beemk
                                                                                  CLICK HERE
                                                                                  • Jan 2002
                                                                                  • 20829
                                                                                  #21
                                                                                  also it depends on how long its been on the market
                                                                                  I host with Vacares

                                                                                    Comment

                                                                                    • m00d
                                                                                      So Fucking Banned
                                                                                      • May 2002
                                                                                      • 3129
                                                                                      #22
                                                                                      4br $562 in my area

                                                                                      I rent my other house to a great couple. I couldn't be more happy with my experience so far in renting the house in the good neighborhood.

                                                                                      I bought the other house for $10,500.00 when I was barely 19 years old. I put a lot of work and money into it in the next 4 years I lived there. I have never regretted buying it, even though I haven't been able to sell it. I lived there for $132 a month which allowed me the opportunity not to work a 9-5 job for most of that time. I wouldn't be where I am today without that purchase. Everyone thought I was crazy..
                                                                                      Last edited by m00d; 06-14-2004, 09:15 PM.

                                                                                        Comment

                                                                                        • cool1g
                                                                                          Confirmed User
                                                                                          • Sep 2002
                                                                                          • 976
                                                                                          #23
                                                                                          assuming there is no major repairs to be made and the local rental market is strong enough to lease the units in a month or so, it sounds like a good deal to me.

                                                                                          i was looking at a 4-plex in Vegas recently with the same rents and it was priced at $275K and would probably fetch $400K in LA if it was in a decent neighborhood...

                                                                                          and airpal, FYI the correct way to value the property would be to assume it is 100% leased, estimated the value and then deduct out the cost to fix up for leasing and the rent loss from having the units vacant for a bit of time.
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                                                                                            Comment

                                                                                            • hyper
                                                                                              Confirmed User
                                                                                              • Mar 2002
                                                                                              • 5294
                                                                                              #24
                                                                                              Originally posted by m00d
                                                                                              these people get to choose what house to live in, why would they choose a warzone neighborhood? am I mistaken? how do you snag these sec.8 renters?
                                                                                              most of these people have family in the area, stay in the community, grew up there.

                                                                                              for you and I it's bullshit. but they love it.

                                                                                              you screen them just like any other tenant, i do a very thorough screening.

                                                                                              My properties are clean and maintained and in 2 years have had 100% occupancy

                                                                                                Comment

                                                                                                • m00d
                                                                                                  So Fucking Banned
                                                                                                  • May 2002
                                                                                                  • 3129
                                                                                                  #25
                                                                                                  Originally posted by hyper
                                                                                                  most of these people have family in the area, stay in the community, grew up there.

                                                                                                  for you and I it's bullshit. but they love it.

                                                                                                  you screen them just like any other tenant, i do a very thorough screening.

                                                                                                  My properties are clean and maintained and in 2 years have had 100% occupancy
                                                                                                  interesting.

                                                                                                    Comment

                                                                                                    • hyper
                                                                                                      Confirmed User
                                                                                                      • Mar 2002
                                                                                                      • 5294
                                                                                                      #26
                                                                                                      Originally posted by m00d
                                                                                                      interesting.
                                                                                                      although they do need to inspect your property before u can accept section 8.

                                                                                                      call your local hud office

                                                                                                        Comment

                                                                                                        • m00d
                                                                                                          So Fucking Banned
                                                                                                          • May 2002
                                                                                                          • 3129
                                                                                                          #27
                                                                                                          Originally posted by hyper
                                                                                                          although they do need to inspect your property before u can accept section 8.

                                                                                                          call your local hud office
                                                                                                          i think i will.

                                                                                                            Comment

                                                                                                            • iwantchixx
                                                                                                              Too lazy to set a custom title
                                                                                                              • Oct 2002
                                                                                                              • 12860
                                                                                                              #28
                                                                                                              dont listen to a word the realtor says. Get a GOOD building inspector and take him/her more seriously. Also get an assessment.

                                                                                                                Comment

                                                                                                                • m00d
                                                                                                                  So Fucking Banned
                                                                                                                  • May 2002
                                                                                                                  • 3129
                                                                                                                  #29
                                                                                                                  my crackhouse also has another adjoining city lot that I could build 2-4 efficiency apartments on. man that would be sweet with the sec.8

                                                                                                                    Comment

                                                                                                                    • hyper
                                                                                                                      Confirmed User
                                                                                                                      • Mar 2002
                                                                                                                      • 5294
                                                                                                                      #30
                                                                                                                      Originally posted by m00d
                                                                                                                      my crackhouse also has another adjoining city lot that I could build 2-4 efficiency apartments on. man that would be sweet with the sec.8
                                                                                                                      or maybe put up a prefab duplex on the lot

                                                                                                                        Comment

                                                                                                                        • m00d
                                                                                                                          So Fucking Banned
                                                                                                                          • May 2002
                                                                                                                          • 3129
                                                                                                                          #31
                                                                                                                          Originally posted by hyper
                                                                                                                          or maybe put up a prefab duplex on the lot
                                                                                                                          prefab is all good
                                                                                                                          i didnt know you could get those in duplex
                                                                                                                          i guess i never gave it any thought

                                                                                                                            Comment

                                                                                                                            • hyper
                                                                                                                              Confirmed User
                                                                                                                              • Mar 2002
                                                                                                                              • 5294
                                                                                                                              #32
                                                                                                                              Originally posted by m00d
                                                                                                                              prefab is all good
                                                                                                                              i didnt know you could get those in duplex
                                                                                                                              i guess i never gave it any thought
                                                                                                                              yep and very cost effective

                                                                                                                                Comment

                                                                                                                                • m00d
                                                                                                                                  So Fucking Banned
                                                                                                                                  • May 2002
                                                                                                                                  • 3129
                                                                                                                                  #33
                                                                                                                                  Originally posted by hyper
                                                                                                                                  yep and very cost effective
                                                                                                                                  do you have a good source?

                                                                                                                                    Comment

                                                                                                                                    • Alltopnotch
                                                                                                                                      Confirmed User
                                                                                                                                      • May 2004
                                                                                                                                      • 2845
                                                                                                                                      #34
                                                                                                                                      yea i need to buy some fucken real estate...thats my goal...
                                                                                                                                      WANT A FREE LAPTOP?

                                                                                                                                        Comment

                                                                                                                                        • hyper
                                                                                                                                          Confirmed User
                                                                                                                                          • Mar 2002
                                                                                                                                          • 5294
                                                                                                                                          #35
                                                                                                                                          Originally posted by m00d
                                                                                                                                          do you have a good source?
                                                                                                                                          http://www.modular-usa.com/new/floorplan_01.htm

                                                                                                                                          just search for modular duplex homes

                                                                                                                                          i dont have a known source sorry

                                                                                                                                            Comment

                                                                                                                                            • airpal
                                                                                                                                              Confirmed User
                                                                                                                                              • Jun 2004
                                                                                                                                              • 113
                                                                                                                                              #36
                                                                                                                                              Originally posted by cool1g
                                                                                                                                              assuming there is no major repairs to be made and the local rental market is strong enough to lease the units in a month or so, it sounds like a good deal to me.

                                                                                                                                              i was looking at a 4-plex in Vegas recently with the same rents and it was priced at $275K and would probably fetch $400K in LA if it was in a decent neighborhood...

                                                                                                                                              and airpal, FYI the correct way to value the property would be to assume it is 100% leased, estimated the value and then deduct out the cost to fix up for leasing and the rent loss from having the units vacant for a bit of time.
                                                                                                                                              What method of valuation are you using? I'm referring to the income capitalization approach which is net operating income over cap rate. If you can give some more information as to your valuation method, that'd be great as I'd be interested in learning more about it.

                                                                                                                                                Comment

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