Posted by Glen SoCal on February 18, 2002 at 12:14:21:
I think that you should look at your opportunity this way, you might ask yourself these questions:
1)After the purchase, am I immediately in line for a 15-20% profit if I decide to sell?
2)Or, am I making enough immediate cash flow for taking my valuable time out to rent a four-unit?
Your approach should include the costs to purchase and sell and the AMOUNT of that spread for a profit, or, costs to purchase and maintain the property for a reasonable AMOUNT of cash flow. That’s all.
Price is irrelevant. The AMOUNT of money spread between your costs and profit or cash-flow are.
Let the price you are willing to pay become an empirical decision. Then start lower and work for your best deal.
If you don’t know how the numbers SHOULD work, you may want to read up a little on buying and profiting from rental property.
There are a hundred ways to finance property. But the solution to the problem how the property will be financed, while making a profit, will depend upon the needs of the parties involved. In this case, you and the seller.
One poster said that the seller isn’t motivated. Maybe not, maybe so. HE may however, be motivated by needs different than YOURS. If he wants to cash out, he may be VERY motivated to cash out right now…at $260,000. He may not however be very motivated to sell you his place on seller-financing terms.
So the answer is, vague. You must fill a need. Find out what concerns the seller, find out what his needs are, and see if you can create a solution that benefits you both…profits for you both.
I’m not an experienced investor. So I’m not the best one to give you solutions or methods to try. But your method or solution WILL depend upon what the seller needs, or, WHAT it is that will motivate him that agrees with your terms.
It’s kind of like, follow the scent, or follow the money. Follow the motivation, and fill the need…for a profit.