OfflineJust recieved my first potential property offer...it's a triplex that is rented...makes $1200 a month...the owner is asking $64000. After i did a little digging and some initial analysis, i found out that the property listed has a tax appraised value of $39405...so now i'm verifying that the property address given is accurate...if so, then this is way over priced!
Now i'm waiting for their reply to my follow up inquiry...
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Michael J. Stephens
"If a Task is once begun,
Never leave It until It's done;
You can make it if You try,
But, YOU must do the trying."-(Otis C.Polk Jr.)
Tax appraisals are always much lower than FMV. You really can't use them to determine a property's true value. It would be better for you to run comps of other complexes in the same neighborhood. See what they're valued at and how much ones that have sold recently went for.
Cindy
Life isn’t about waiting for the storm to pass…
It’s about learning to dance in the rain.
The most difficult thing is the decision to act, the rest is merely tenacity. The fears are paper tigers. You can do anything you decide to do. You can act to change and control your life; and the procedure, the process is its own reward. - Amelia Earhart
"The greatest mistake you can make in life is to continually be afraid you will make one." - Elbert Hubbard
Alright, thank you! The other properties in the neighborhood (according to zillow.com) have sold for about $15,000 less than the initial asking price...so i'm curious if perhaps the seller is just looking to get out from under this one or if there is another issue. I've asked him for more information on this property and his current situation. I understand that it is an income property, and i haven't written it off yet. I'm real new at this, but i'm eager for my first deal! I couldn't believe how quickly i recieved a response to my craigslist posting! I got this offer 4 hours after i posted my ad! I am super stoked about the response time...still a little leary of this particular offer, but anxious and hopeful!
Michael J. Stephens
"If a Task is once begun,
Never leave It until It's done;
You can make it if You try,
But, YOU must do the trying."-(Otis C.Polk Jr.)
You mentioned that other props in the neighborhood have sold for about $15K less than asking. What did they actually end up selling for? Is what he is asking for his prop in line with what they got?
A lot of times the owner is selling because he is just sick and tired of being a landlord. His reason for wanting out could be just that simple. If you can make this prop give you a postive monthly cash flow, then go for it. The fact that all three units are rented out is a good sign. I would check a RE website to see what the average rent in the neighborhood is and what the vacancy rate on rental units is. I think ziprealty.com offers this, and maybe zillow.
If everything looks good, go ahead and arrange a walk-through.
Cindy
Life isn’t about waiting for the storm to pass…
It’s about learning to dance in the rain.
The most difficult thing is the decision to act, the rest is merely tenacity. The fears are paper tigers. You can do anything you decide to do. You can act to change and control your life; and the procedure, the process is its own reward. - Amelia Earhart
"The greatest mistake you can make in life is to continually be afraid you will make one." - Elbert Hubbard
I have a friend who negotiates and purchases lots of properties. One thing he has passed along to me is "A property is only worth as much as someone is willing to pay." Cindy is giving some sound advice. The tax appraised value could be based on the last purchase price of the property. And that could have been many years ago. I wonder how long the current owner has held the property? Good Luck and Blessings to you.
Kathy Van Dyke, California
He probably offered higher because he expects to get a lowball offer and whatever is offered is what he will be expecting;
He lists at $64k, but wants no less than $49.5k.
He gets offers in the $48k-$52k range he's a happy camper
Ask him what makes his property $16k more than the comps you researched
If he says he had the place renovated, new boiler, furnace, etc., take off $5k
In your mind, you start your offer from $59k and be open
Good luck
Wondering why you would start so high? I'm a bit surprised the owner offered a "no less" figure but as long as he did, why not start there? If he doesn't accept, another offer can always be made, though I would make that one the best and final.
That is, assuming, that all due diligence has been done and the prop is actually worth $49.5K.
Cindy
Life isn’t about waiting for the storm to pass…
It’s about learning to dance in the rain.
The most difficult thing is the decision to act, the rest is merely tenacity. The fears are paper tigers. You can do anything you decide to do. You can act to change and control your life; and the procedure, the process is its own reward. - Amelia Earhart
"The greatest mistake you can make in life is to continually be afraid you will make one." - Elbert Hubbard
Thanks to everyone for your input and experienced opinions! Sadly, the owner has backed out of the deal.But it was just my first proposal! I anticipate many more! Thanks again! Your inputs made it a little less scary for me. The next ones will be easier, I'm sure of it!
Michael J. Stephens
"If a Task is once begun,
Never leave It until It's done;
You can make it if You try,
But, YOU must do the trying."-(Otis C.Polk Jr.)
Just curious,were you able to make an offer on that triplex?
Yes, I offered $46,550.00 after doing all the comps in the area. He didn't really want to sell I guess. But it gave me a valuable learning experience! The property just wasn't worth $64,000.00 to me. I believe he was testing the waters, so to speak. The other houses around his neighborhood were going for $34,000-$52,000. His was about middle of the road as far as condition and location. The crime stat was an important piece of info for me...I personally know of that particular area, and it is known for rowdy tenants! But I thought if I might be able to get my feet wet with this one for the right price< I would dive in...oh well. Not sweating it tho'!
Michael J. Stephens
"If a Task is once begun,
Never leave It until It's done;
You can make it if You try,
But, YOU must do the trying."-(Otis C.Polk Jr.)
The triplex needed some repairs to the exterior...paint, 2 windows...and it looked like a new roof was needed as well. I thought $46,550 was a fair offer.
Michael J. Stephens
"If a Task is once begun,
Never leave It until It's done;
You can make it if You try,
But, YOU must do the trying."-(Otis C.Polk Jr.)
It wasn't meant to be.
Take it as a learning experience and move onto the next deal
You've got more than enough people to bounce your ideas off of on here
I can't thank each of you enough for your time and input! You have given me a lot of information, and experienced opinions. I love this site!
Michael J. Stephens
"If a Task is once begun,
Never leave It until It's done;
You can make it if You try,
But, YOU must do the trying."-(Otis C.Polk Jr.)
Like everyone above said, the tax assessed value means nothing. Taxes on the other handcan be important, especially on as of recently when the taxes are assessed way higher than the property is worth. On really expensive properties this can be a deal breaker a deal breaker. I've ran across properties that were incredible deals ($400k for a $600k FMV property), but once taxes came into play (based on an assessed value of $1M) it was a bad deal. A lot of people overlook taxes, which on cheaper properties often don't make a large impact on the monthly price tab even when they are assessed higher than they should be. Nonetheless, always be sure to look at them factor them into your equation, especially when it is going to be rental where you need to ensure your monthly rent gives the profit you need.
Go off the comps to get your baseline, then factor in rental comps (www.totalviewrealestate.com does both sales and rental comps for you). Then factor in intangibles like rental demand and so forth.
So long as you get a great deal on it you'll be set.