Saturday, June 23, 2007

Buying a duplex

I've been negotiating back and forth with a seller on a duplex in the midwest for the last couple weeks. Their initial starting price was $79,900, but they had recently dropped it to $74,900 since they hadn't gotten it sold yet after being on the market for a while. The property had good cashflow, so I decided to make an offer. I offered $58,000. They came back with a counter offer of $72,000, saying that was their final offer. I countered back again at $65,000, splitting the difference. They came back later that week and said they could do $69,200, but that was the lowest they could possibly go.(my realtor told me they even dropped the commission from 8% to 6% to be okay with this price- we weren't sure why they initially were paying their broker 8%) I waited a bit and decided to come back and offer them $67,500, although they seemed to be close to maybe taking no deal at all and just holding out. I figured that since it had been on the market for 100+ days and my counter was just $1,700 short of their last "final offer", they'd be crazy not to take it. If they really wanted to sell, I figured they should take the deal. I heard back a couple days later, and they decided to accept my offer. So, now I need to get out there and check it out soon. I may try and change my flight on my way back from Las Vegas and make a stop in the midwest to do a walk-thru, meet with some property managers and check out the neighborhood. Also, I'd really like to meet with the realtor I've been working with. She seems like she really knows her stuff, and if things go well with everything I plan on doing more business with her. It's very hard to find realtors who actually know about investment properties, and she knows a lot about them, and does a lot of investing herself, which seems to be rare with most realtors who just want to sell you whatever they have, regardless of whether or not it makes sense as a good investment. I wouldn't mind gearing my investment strategy towards cashflow properties if I have a good team(realtor, and property management) where I don't have to hassle with much. I can focus on making money, and I won't have to worry about all sorts of different deals, I can just buy something that will cashflow and have my PM deal with everything. That's the tough part though. Hopefully I'll find a good PM.

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