Posted by arlanj on April 18, 2005 at 13:15:29:
I still don’t see the value. You said the Market value of the property is $95,000. If you get it for $80,000 + closing costs + carpet + appliances + holding costs+ other misc charges. I think you will be over $85,000 if not close to $90,000.
Make sure you offer low. You can always increase your bid.
Making my first offer today! - Posted by Jeff M
Posted by Jeff M on April 18, 2005 at 11:31:46:
Here’s the scoop. I’m off the pot, so to speak, and over the weekend, I drove around to look at some of the listings in my desired neighborhoods. I’m looking at multi-families at the moment, and Sunday, I went to look at a duplex that was located four doors down from my in-law’s house.
The house is listed at $155,000 which is only $60,000 too high for the area. The realtor even agreed with me that the house is terribly over-priced, but the owners, who live next door, apparently came to this price from an estimate that was done last year. The house used to belong to their parents, and I assume that they inherited it after they passed.
The house has been on the market since January with no bids (can you guess why?) and I told the realtor that I would make an offer, but they wouldn’t like it. In fact, it would be for less than 2/3rds of what they’re asking. He responded by asking me to put it in anyway, because it will tell the owners that their house isn’t worth nearly what they’re asking. It’s almost comical. My in-laws bought a house four doors up from this one for $85,000 six months ago. Granted, their house is a 2-bed, and this one is a 2-bed and 1-bed duplex, but without golden sinks, tubs, and toilets, there’s no way that this house is worth almost twice of what my in-laws have.
So here’s the dilema. The house is in good condition. It needs appliances, and one room upstairs needs new carpet. I was thinking of making an offer around $80,000, which is about $15,000 under market value, just to get things started. I don’t yet have financing in place, but there are many financing companies at my REIA group whom I could do business with. I know this might sound retarded, but should I get financing set in place before I start making offers? There’s a few other multi’s in my desired neighborhood, and I’d like to start making offers on them (every investor I’ve ever talked to has told me to just start making offers when starting out). I need to take these houses with little or no money down because I really don’t have any of my own to use. I’d like to get it all encompassed in the loan, but I know that many investors try to stay away from the banks. Am I thinking too conventional? Is there another approach I should be taking?
On a side note, as I pulled up to this duplex that I walked through yesterday, I saw a house right across the street with county stickers on the front door and long grass in the unkempt yard. Looks like a vacancy to me. I’ll be researching the vacant house later today to try to locate the owner of that one as well. I just love how this business has opened my eyes.
Re: Making my first offer today! - Posted by Leonard
Posted by Leonard on April 19, 2005 at 03:18:57:
Jeff, if you have a good deal, the money will follow. Don’t just make offers to be making offers. Someone pointed out above that you need to re-evaluate your numbers. I think so too. Remember all sellers are motivated! However, not all sellers are motivated to deals that allow you as an investor to make a profit. You need to have the correct posture while doing this business as in any other business. Remember they need YOU! You are taking care of their problem! You need to establish the parameters for buying and selling. If the numbers do not make sense move on. The 1st deal is always the hardest, just get out there and make sound offers. Jim Rohn says if you do something often enough a ratio starts to form. It is the absolute truth.
Pursue that vacanat house accross the street with zest. Keep doing what you are doing. Take action and the results will follow.
Too many people never take any action. They buy course after course and keep reading this forum and every other forum, but none of that makes you money.
Doing makes you money. Get rid of the scarcity mentality and realize that you were meant to share in the worlds abundance.
Good luck and good investing.
Re: Making my first offer today! - Posted by Natalie-VA
Posted by Natalie-VA on April 18, 2005 at 15:45:54:
Yes, get your financing lined up immediately. That way you know exactly what you can afford, and your offers will be more credible.
Re: Making my first offer today! - Posted by Jeff M.
Posted by Jeff M. on April 18, 2005 at 15:05:24:
Thanks for the response. I know my initial offer wasn’t exactly the 70% ARV formula, and it was closer to retail. I just thought I’d offer a little under market value, even though after expenses, it would average out to standard value. I’ll try not to be an idiot and stray from the investor formula. I’ll offer them $65,000 and see how sad they get.
This could be fun.
Re: Making my first offer today! - Posted by JASON
Posted by JASON on April 18, 2005 at 11:43:42:
Its never too soon to get the financing ball rolling. Many realtors require a pre-approval letter from your lender…
Re: Making my first offer today! - Posted by arlanj
Posted by arlanj on April 18, 2005 at 11:50:05:
I would lower your offer on the first and find the owner of the vacant prop and steal it. The first sounds too close to retail. Make a lowball steal offer and either they take it or you leave it.
Re: Making my first offer today! - Posted by adam
Posted by adam on April 18, 2005 at 12:53:17:
hi good luck! im making my first offer on wed. if they inherited it you never know how motivated they are. i would talk to them personally. a lot of people dont want to be landlords. they just might want the cash and be done. on the other hang they might want to hold onto it unless the price is right. i would talk to them first.