Here are my thoughts - Posted by Ronald * Starr(in No CA)
Posted by Ronald * Starr(in No CA) on August 09, 2003 at 10:54:09:
Just from the price and the rents, this sounds like an ok deal, not a great one.
I think it is important to be able to compare a potential purchase with whatever else is available in the marketplace. Or with whatever else you may be able to dig up because of your knowledge of the area.
If you don’t know what other similar deals have sold for in the open marketplace, you are not, in my opinion, ready to start laying out your money. Remember there will always be good deals in the future. Sure, there is one property that I missed buying when I was very green and starting out, that I regret not buying. But mostly, I do not worry about the deals I did not acquire. It is better to pass up two good deals than get yourself entangled with one bad deal, in my view.
So, how does this property compare to other properties that have sold recently? Are there better deals to go after?
Then, if you decide you need a lower price, offer less. It is possible that the “seller,” the judge, will accept a low offer now if there have been several other low offers that were rejected. Do you have any information about what was offered by the others? Even if not, perhaps your “low offer” will be higher than the others offered and the judge will find it acceptable.
If not, so what? On to the next potential deal. It’s all a matter of numbers. Eventually you see and offer on enough properties to make a good deal.
In a situation like this, it is good to know other investors. One by one different investors make very low offers for the property, all within a narrow range. Now you come along and offer slightly higher than the range. May just get the purchase. When somebody is offering a property for sale, the market tells the offerer what it is willing to pay. The sensible offerer will see that and adjust his/her expectations of a sales price to what the market is saying.
Ethical? Sure, if all of the investors were making a legitimate offer. That is, they would have consumated the purchase at the offered price.
Good InvestingRon Starr*****