Author Topic: Prospective deal - would like your thoughts  (Read 833 times)

FrugalSaver

  • Pencil Stache
  • ****
  • Posts: 634
Prospective deal - would like your thoughts
« on: January 03, 2017, 12:57:37 AM »
An absentee landlord has 3  properties they own from out of state but Within 30 min of where I live.  All 3 < 10 years old and have renters In them on leases ranging from 12 Months to 36 Months.

The properties are in a very nice area and total rent is about $ 8,000 per
Month. He would like to sell them for $1mm in total. Based
On tax rates here and expenses and property mgmt etc the cash on cash is about 8%.

The likelihood for appreciation is big on these but I don't ever invest for that purpose. My other rentals are about a1/3 the price Of One of these 3 and cash on cash is 12-15% for my other properties.

What thoughts or pitfalls would you think exist?

How would you finance the deal?

NoNonsenseLandlord

  • Bristles
  • ***
  • Posts: 396
  • Age: 60
  • Location: Eagan, MN
    • No Nonsense Landlord
Re: Prospective deal - would like your thoughts
« Reply #1 on: January 03, 2017, 04:48:52 AM »
If they truly return 8%, and are class A properties, that is not too bad.

If you are managing them for free at that return, and you do not take into account ~10% of rents for maintenance and a 5% vacancy allowance, then it is not a good deal.

Cwadda

  • Handlebar Stache
  • *****
  • Posts: 2181
  • Age: 25
Re: Prospective deal - would like your thoughts
« Reply #2 on: January 03, 2017, 08:17:30 AM »
Offer $800k. You have nothing to lose. You could also ask for a valuation breakdown if he wants to sell individual properties and then just take the one or two you think is the best deal.

FrugalSaver

  • Pencil Stache
  • ****
  • Posts: 634
Re: Prospective deal - would like your thoughts
« Reply #3 on: January 03, 2017, 11:09:58 PM »
Thanks for the thoughts everyone.  I'm continuing to chat with the seller.  I'll keep y'all posted.