Motivated Seller asking Too Much - NEED QUICK HELP! - Posted by Tony_PA
Posted by Tony_PA on January 23, 2000 at 22:13:00:
I am sitting with a motivated seller on 4 seperately deeded properties, but after doing the cash flow analysis, there is a -10,000 with 2 of them. By the way, these are 2 duplex’s with each side deeded seperately-so there are two buildings. It is the one building that has the negative cash flow. The other one breaks even or better. So my biggest concern is how to turn this negative into a POSITIVE!
How can I figure out the value of the properties based on income? The comps and appraisal all check out for asking price. Rents are below market value and seller has even offered to pay an adjustment to the rents for the 1st year to get the income up. Even at the gauranteed “proposed” rents, there is still -7000 cash flow on these two units.
Here’s the breakout
Asking price for each $69,900
Annual (actual) gross on each - $4800 / $5400
Total Expenses on each - $2100 / 2700
Sellers agree to an 80/25 (extra 5 to help closing)broken out for each or the two properties as follows:
1st 55,920 @ 9.75 - 30 years
2nd 17,725 @ 7 - 25 years
Note 10,000 @ 7.75 - interest only with balloon at 7years (needed from another deal)
I do not feel that the income supports asking price and think the only thing to do is to offer a lower price. The seller IS MOTIVATED! I am checking with the courthouse tomorrow to get last sale price.
The seller is another investor. By the way, this is my second deal I am working on, so I am still new at this and the seller is a seasoned investor with 14+ years of real estate investing, but is opened minded and willing to listen.
Thanks for suggestions!