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  #11  
Old 12-01-2007, 05:26 PM
Thremp Thremp is offline
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Default Re: Making an offer on a SFR

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(uncertain about current plummeting markets, maybe someone with MLS access in a big metro area can chime in)

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Definitely very dependent upon markets. My friend bought a place for 65% of original list price in the east bay/northern California (and I question whether it is a good deal still). Know your market before making an uneducated offer.

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List price or original list price? These could be worlds apart.
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  #12  
Old 12-01-2007, 05:59 PM
DesertCat DesertCat is offline
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Default Re: Making an offer on a SFR

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Thanks DC. Based on what you are saying shouldn't this place be worth closer to $250 - 300K if you were looking for 7.5% cap rate?


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Well, I want a 7.5% cap rate because I'm cheap and want a positive cash flow deal so good I can't screw it up. There is nothing golden about 7.5%. It all depends upon what you can reasonably expect in appreciation. If a property appreciates 10% per year and you can afford to fund negative cash flow, paying even a 2.5% cap rate starts to make sense. That's how lots of these prices got this way and why I think they are due for more correcting.

The only other way around it is if you can increase rents. I had a friend pay a cap rate that must have been around 5% on an old home. He knew it was zoned commercial, rehabbed it, and rented it commercially for about 4x it's previous rent, and made an absolute killing.
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  #13  
Old 12-01-2007, 07:37 PM
haakee haakee is offline
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Default Re: Making an offer on a SFR

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List price or original list price? These could be worlds apart.

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Original. 72% of final list price.
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  #14  
Old 12-01-2007, 08:49 PM
spex x spex x is offline
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Default Re: Making an offer on a SFR

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I have read spex x's rough offer plan and I wiil try but, in my area I will be suprised if it works. I think spex lives in a small town.



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That scheme will find you the most motivated seller our of 5 properties (or whatever) properties that serve your needs. Living in a small town has nothing to do with it.

And it may not work. It works because it creates the fear of losing a buyer. I've tried it many times with mixed results.
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  #15  
Old 12-01-2007, 08:55 PM
spex x spex x is offline
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Default Re: Making an offer on a SFR

Are you buying this home primarily for an investment or will you be living there? The tenor of your posts has led me to think that you wanted to live there - am I mistaken?

In either case, my opinion is that cap rates are not usually the best way to judge the viability of a single family residence for investment purposes. And if you're not renting out to someone then I think that there are probably other better ways to decided whether to buy than cap rate.
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  #16  
Old 12-01-2007, 09:12 PM
spex x spex x is offline
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Default Re: Making an offer on a SFR

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Are you buying this home primarily for an investment or will you be living there? The tenor of your posts has led me to think that you wanted to live there - am I mistaken?

In either case, my opinion is that cap rates are not usually the best way to judge the viability of a single family residence for investment purposes. And if you're not renting out to someone then I think that there are probably other better ways to decided whether to buy than cap rate.

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Another thing - any seller would be insane to take an offer of 50% under fair market value. Don't get your hopes up. You should go down to the county courthouse and figure out how much money is owed on each property that you submit offers on. That number is likely the absolute bottom line. Not too many sellers will bring money to the closing table.
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  #17  
Old 12-01-2007, 10:48 PM
Thremp Thremp is offline
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Default Re: Making an offer on a SFR

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List price or original list price? These could be worlds apart.

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Original. 72% of final list price.

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This does bring up a good point though. Prices with price slashes are sometimes perceived as undesirable. You'll see a house maybe knock like 4-5% off the price and if it still doesn't take... get unlisted instead of just getting "trash" offers. But it all depends... Its a huge field and each situation is different :x
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  #18  
Old 12-02-2007, 03:05 AM
dknightx dknightx is offline
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Default Re: Making an offer on a SFR

wait ... im a little confused. So if we see a house on sale, but also for rent. We should offer the rent price * 12 / .075? I can't imagine this works in every market ... or does it?
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