First CRE deal-need feedback on offer - Posted by Alan-Baltimore

import · May 31, 2000, 11:00am

Posted by JB in MD on May 31, 2000 at 20:16:49:

import · May 31, 2000, 11:00am

Posted by Alan-Baltimore on May 31, 2000 at 11:00:03:

I’m looking at my first real CRE deal and would like some feedback.

Property is a townhouse (rowhouse in “Baltimorese”) which has just become vacant because the elderly woman owner has moved to a retirement home. The house is all paid off and the sale is being handled by the grandson. He told me that he doesn’t need all the money upfront but would need it in one year for his grandmother’s expenses. He says he’s going to fix it up a little before selling.

Here are the numbers:
Comps are $60-$65K (grandson says a realtor has told him low $70s)

My idea is to make two offers;

All cash $40-45K
$55K with up to $5.5K down and balance in one year (terms negotiable)

Exit strategy is to sell or lease option for $65-70K with owner financing.

I have excellent credit and am looking to build cash flow rather than a big payday.

Any comments would be appreciated.

import · June 1, 2000, 12:06am

responser - Posted by Matt

Posted by Matt on June 01, 2000 at 24:06:41:

He seems very flexible so I would try something creative with this one but, don’t let it slip away. You could buy it strait out and pay extra on the principle each month and pay it off in no time(paying an extra $100.00 a month can save you huge money). You could then L/O it for a little more. Or you could L/o it and get him to give you something like $300. a month toward the down payment for like 16 months. Then you could sub lease it for more money. The only thing is that you may only be able to buy up to 4 properties the conventional way so, this sounds like one of the nonconventional ways to save the other 4.
Only my opinion though. If it were me I would buy it out right.
Matt

import · May 31, 2000, 4:28pm

Re: First CRE deal-need feedback on offer - Posted by John (MD)

Posted by John (MD) on May 31, 2000 at 16:28:22:

Alan
Go with the 60k-65k comps, Ask what is the lowest price he (grandson) can accept if you
pay all cash- as is- with a quick close…
He may sell for 30k - 35k (or less)
You can get $600-$700 a month rent or lease.
This will give you a positive cash flow.
Hope this helps…
John Parker
R.E. Investor