First Deal Jitters
I'm working on my first deal and starting to second guess everything. The seller just sent me a counter offer. The property is valued at 110k. There are no repair cost to speak of (a bedroom window need to be fixed) it's vacant and in a good neighborhood. His counter offer is for 85k. That's 25k below FMV. I'm looking for an assignment fee of 3k leaving 22k for the end buyer. This really looks good to me but now that it's a real possibility I'm not sure anymore. Please I need some advice and/or comments on these numbers or anything else. Thanks and please hurry.
rns
Where did you get the property value from? What did you originally offer and is this his first counter?
The house was appraised about 8 months ago when he had a contract to sell but it fell through at the last moment. Also the appraised value and the two different comps I had done are consistent (within a few k). My first offer was for 73,5 and he rejected it cold. I waited a day or two and came back with a different offer of 75 and that's when he countered with 85. Rent rates in that area is about 700 so it would make an excellent rental. Thanks
rns
What was his asking price? If his asking price was 90k and he came down 5k, I would go up 2.5k, offer 77,500 (if you still think that is a good deal)
yes 90k was his first asking price!! My question is given the numbers presented, would that leave enough room for me to get 3k assignment fee and still be worth while for the end buyer. I'm going to use your suggestion and go up 2.5. What do you guys think of the numers though. Thanks
Rns
Considering rent alone, $700 rent for a 75,000-80,000 house is not very good in my opinion. If property is appreciating very well in the area then it may be an ok rental/investment.
I think the number are pretty good. It depends on how high the taxes are in that area as I tend to agree with NOthanks on the rent being low. Generally a good rule of thumb is the rent should be about 10% of the FMV. That should put your rent in the 800-900 range. If I can't clear at least 200 a month I wouldn't buy it. Your payment if you go conventional at about 6.5% and 10% down with taxes and insurance is goingto be at least 500-525. The good news though is it's turn key and you won't be sinking anymore into it to get it up to speed which I generally have to do so that's saving you some. I say jump in...the first one is always the toughest and after that it just gets too easy!
Well, I took this as you were not holding long-term so I didn't bother looking at cashflow. 75k for something that gets $700 is not a good deal in my opinion. Something for $75k would need to be getting $900 a month for me to do it, but if you are not holding long-term, it might be a good deal for you.
GL
What forms do you use to do your assignments? How are you looking to find an end buter? :-?