NEWBIE about to make an Offer

[KathrynFallis]

Hi Ray,

Thanks for your feedback.

The home has been on the market for a while. Original price was $449,000 reduced to $429,000 and now sitting at $419,000. I was basing my numbers on $400,000. The home is lovely inside but does lack street appeal. I am going to spend some time over the weekend, checking out rentals in the area. I want to know exactly what my competition is as I am not going to rush into anything in this type of market. When looking at the comparables, this is the largest, most well kept home in this price range by far. Townhomes in Surrey sell in the $300,000....this is a large home on a view property (there go my emotions again

. The home is not currently a rental property and owner occupied. I am learning a great deal through this process and will become an expert in the area. The down payment for this home will be taken from equity in my Surrey townhouse rental property.

I plan on attending the REIN meeting this evening in Coquitlam.

Thank you Ray.

 

[KathrynFallis]

I also have not made an offer at this point in time and have no idea if the owners would accept $400,000.

 

[REINteam]

Hi Kathryn,

I doesn`t look this has been brought up yet...is the 2 bd suite legal? I know some towns/areas, not sure about Surrey or your area in particular, have their own bylaws about renting out basement suites, even if they`re legal - the city may only allow family to live in the suite. Make sure you can rent the suite as a stand alone product, b/c without it the numbers will really dive.

Many members, including myself, have gotten caught up in emotional buys...but you`re not living there. Tenants will be hard pressed to treat your property better or pay more for a view - buy a place with a view for yourself. I get the view part for potential appreciation, but banking on appreciation alone while feeding negative cashflow for years until you finally sell is a very unsustainable business model and odds are you`ll break even at best after accounting for how much money you`ve put in monthly - not including repairs and such over the years.

Sit down and come up with a price that cashflows monthly, this is your bottom line. You still have risks with rent prices (high dollar figure, potentially unsustainable for some), but if you must move on this property only do so if you get a price that works for you. The sellers may be fishing, they may not be overly motivated, who knows. Find out how serious they are, offer YOUR price and negotiate...just remember, as soon as they counter the initial offer is VOID...if you don`t like it counter again with a lower price, the same price, slightly higher, or don`t counter at all and walk.

The place may look great, you might even want to live there, but how will you feel if a tenant damages your beautiful place? Do your best to rein in those emotions, buy on numbers only.

Regards,

Ray Reuter
Real Estate Investment Network

 

[NorthernAlex]

Did you find out when and for how much the current owner did buy the house? If you know that the current owner bought it a couple years for 320,000, he could even afford an offer of 360,000.

 

[invst4profit]

I still can not see the attraction of this as a rental property.

Financing $400,000 @3% for 35 yrs only leaves $565/ month to cover expenses. This is not sufficient especially for this large of a single. Plus even if you could get 3% it is not sustainable.

At 100% financing with a rent of 2100/ month you would be pressed to make money at $275,000 - $300,000. With a rent of $2800, at that price, it would cash flow but I assume that rent is not guaranteed.

I do not see any profitable way of doing this deal without very high risk.

 

[Thomas Beyer]

QUOTE (KathrynFallis @ Apr 9 2009, 11:30 AM) I also have not made an offer at this point in time and have no idea if the owners would accept $400,000.
keep looking .. write at least 10 offers on 10 properties to get used to it .. and expect 7-8 with no response .. but 2-3 counters ..