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Prospective deal - would like your thoughts
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Topic: Prospective deal - would like your thoughts (Read 1129 times)
FrugalSaver
Pencil Stache
Posts: 832
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?
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NoNonsenseLandlord
Bristles
Posts: 396
Age: 64
Location: Eagan, MN
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.
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Cwadda
Handlebar Stache
Posts: 2178
Age: 29
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.
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FrugalSaver
Pencil Stache
Posts: 832
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.
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Prospective deal - would like your thoughts