Our newest success story is a gamble of sorts.
We made an offer on a duplex that was for sale for $160,000. The gross rents the seller said in the MLS were $2000. Doing some quick research it looked like the rents were about $800 for 1 unit and $900 for the other. Maybe $850 and $950. In checking the comps (sales comparables ie recent similar sales) I found that the neighboring duplexes sold for $115,000 – 125,000.
It was new on the market so I decided to offer full price, and see what happens. When we got the appraisal report it was appraised for $126,000 and the appraiser called out some repairs that needed to be done. Mind you we paid for the home inspection $400, appraisal $650 so we were into this for $1050.
We had our realtor talk to the seller’s realtor and tell her that the appraisal was $126,000 and therefore we were counter offering that as the final price. And keeping the $2500 credit for closing costs from the original offer.
The seller finally agreed.
If they had not we would have walked away from our $1050 in inspection fees but that’s the gamble you take. I was willing to bet the seller knew the price was too high, or that if one appraisal came in at 126,000 most likely future buyers’ appraisals would come in at that. It was a gamble and luckily it paid off.
By acting fast and paying the full price we tied up the property cutting out others that might have been “thinking about it” or passed it up thinking the seller was priced too high.
Often “educating” the seller takes time but pays off.
We should be making $600+ per month from our $31,500 starting October 1st.
What’s our return? $600 x 12 = $7200
$7200 divided by $33,000 investment = 21.8% return not including the tax benefits. And remember rents go up over time…
If you would like to learn more investment strategies, get in touch with us at www.mycashflowacademy.com or simply dial 310-218-6855.