Hi Investors. I'm Kevin and PROUD to say I LOVE Real Estate Investing! My partner and I focus on cash flow properties in Oregon and we have been investing for almost two years now. We've just come off of an investing buying roller coaster ride with this Duplex real estate deal and wanted to share it with REIClub.com and their investors.
With this particular deal we were buying a Duplex in South East Hillsboro (a suburb of Portland, OR). Our initial offer was full price ($154,000). This was a great deal from the jump start since the comparables and our research had the After Repair Value (ARV) in the $225,000 – $235,000 range.
Because our market is saturated with buyers and a limited number of sellers, the property had 9 offers on the table within 24hrs. We submitted our highest and best offer at $171,100 first go round because we knew with this number, even though it was nearly $20,000 more than our original, we were still sitting pretty with our financial cash flow. Each unit rents for $1,050.00 per month with a projected $25,000 in annual rent receipts for the duplex if we became the owners.
Ok, so back to the roller coaster ride…
The agent comes back and says the bank accepted a different offer – too bad right? Well, one week later the agent calls us back and says the first buyer walked away because the people who bought it were having a baby soon and the burden was just too much for them.
Again, we submitted our highest offer against 3 other buyers on our second attempt. Boom, we got shut down again – the bank thought they had accepted a better offer. 2 weeks after that, the agent calls again and says that the previous buyer walked after the home inspection (inexperienced investor who got scared). Agent says “are you still interested?” Of course we are because the property still cash flows.
So after a double barrel loop on this ride…
Round three we're up against only one other offer and low and behold we get stumped again and fall back into second position. But guess what? Five days later the agent calls back and said the last buyer walked again! At this point I told him, “Look. If we submit another offer are you going to guarantee that we get the deal?”
Now all along we were prepared with a 25% down payment, had purchased 3 previous multifamily units the previous year, and had qualifications up the ying yang. A decent portfolio we were presenting to the bank. After laying it hard on the listing agent we finally were accepted 3 days later with the right to purchase the property. We financed 75% of the loan through conventional financing with the Bank.
The principal of the story is that even after three (3) failed attempts to buy the property our persistence paid off in the end. We had the units renovated 30 days later and rented within a week $100 more cash flow per month than we projected.
Kevin J Holtzman