Putting in an Offer on an Investment Property

Most real estate investors present offers directly to the seller or seller’s agent rather than going through an agent.  If you are new to the world of real estate investing you may not be quite sure how to put in an offer.  Putting in an offer on an investment property requires confidence and more importantly you need to understand the maximum price you are willing to pay for a property.

Here are some things you will need to consider:

  • The value of the property once it is repaired
  • Your cost to repair the property
  • The carrying costs while you upgrade the property

All of these will factor into your decision on what to offer and what you are willing to pay for any particular property.

Negotiating

Once you have established your maximum price for the property, never go above that.  When you enter into a negotiation process there are a couple of things you need to keep in mind.  This is a business and you need to keep the emotion out of it.  That means the seller’s situation is none of your business.

That being said listening to the seller is important, ultimately you’re working together to try and put together a deal that works for both of you.  However, their situation should never impact your offer.  Your offer should only be based on the numbers you have already worked out and the most you are willing to pay for the property.

The Seller’s Position

As an investor there are going to be times where your offer won’t be enough to cover the debts that the seller owes on the property.  Don’t be surprised when they accept your offer anyway.  Many can’t afford the burden of homeownership or the costs needed to cover the repairs that are necessary.  They simply want out of the current situation and to move on.

New investors are often hesitant to make an offer because of the seller’s position.  Don’t make assumptions on what they need or what they would be willing to sell for.  Your offers need to be based on financial decisions that work for you.  Flipping houses is a business and while you may want to help the seller as much as you can you need to keep your emotions out of the situation.  If you or the seller aren’t happy with the deal you both have the option of walking away from the transaction.