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

[hyper]

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.

[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.

[GTS Mark]

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

[hyper]

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

[GTS Mark]

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

[hyper]

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

[Makingcoin]

$87,542.56

[m00d]

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

[hyper]

Originally posted by Makingcoin
$87,542.56

they paid 134k for it in 1999

[Makingcoin]

Originally posted by hyper
they paid 134k for it in 1999

Sorry, offer $84,541.87 instead.

[m00d]

how motivated are they to sell?
sounds like a case of glad to be rid of it

[hyper]

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

[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)

[GTS Mark]

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

[m00d]

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

[m00d]

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 ;)

[hyper]

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

[hyper]

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

[m00d]

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?

[beemk]

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.

[beemk]

also it depends on how long its been on the market

[m00d]

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..

[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.

[hyper]

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

[m00d]

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.

[hyper]

Originally posted by m00d
interesting.

although they do need to inspect your property before u can accept section 8.

call your local hud office

[m00d]

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.

[iwantchixx]

dont listen to a word the realtor says. Get a GOOD building inspector and take him/her more seriously. Also get an assessment.

[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

[hyper]

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

[m00d]

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

[hyper]

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

[m00d]

Originally posted by hyper
yep and very cost effective

do you have a good source?

[Alltopnotch]

yea i need to buy some fucken real estate...thats my goal...

[hyper]

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

[airpal]

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.