patrick.net

burritos says

Asking price=$184,900. I offered 160k, bank countered, $184k, I countered 161k..

Good man! your doing it right! Two things in life are inevitable: death and taxes. Everything else is negotiable.

E-man says

Burritos,

That's a loaded question without a lot of info. Is the property in move-in condition? How much additional money do you have to spend on it to make it rentable? What's the FMV on the property? How's the housing inventory there? How's the rental market there?

Learn from your victory. Prosper from your failure.

1. Move in ready. I do have to buy a frig, washer, dryer, and a few blind(estimating 5k). No carpet, paint and wall repairs like I had to do with the grow house I got a year ago.
2. FMV is 180k for move in ready, though the last few that were sold, sold at 160k(they were fixers needing carpet, painting).
3. There's an ample supply of homes of that size, though most are short sales. The prices that are being dangled out there are between 180k and 200k. 50/50 are being purchased by primary home owners/investors.
4. This area has about 1100 new homes that were built and sold 2004-2007. We're at the tail end of the ARM resets though of course the casualties will linger for years. As an investor, the cash flow has been positive for the last 2 years with 20% down for these properties, though the cash flow has slowly improved with with drop in prices.
5. Rental market is strong. Of the properties I've acquired and rented out, I've never had to wait more than a month to get it rented out. The last 2 properties I've gotten took less than 2 weeks to get rented out.

That's the way to do it, Burritos. They go down only 1k, you do too.

Hope you get the property at your price!

You are dealing with a business, not a families emotional ties. They focus on ONE thing, the highest return. If you were dying of thirst, they would not offer you the sweat off their assets.
They will violate you smiling.
Find at least three better properties and offer them the honor of your business. Remind them, it will be worth 20% less next year !

TMAC54 says

You are dealing with a business, not a families emotional ties. They focus on ONE thing, the highest return. If you were dying of thirst, they would not offer you the sweat off their assets.

They will violate you smiling.

Find at least three better properties and offer them the honor of your business. Remind them, it will be worth 20% less next year !

How much invested ? How much back ? What's the risk ?

Yeah. My realtor sent them the last 2 sales which where sub 160, thought those were fixer uppers.

I REALLY want to pay under 170k. But I also REALLY want the property also, cause I think the cash flow works well. I just can't decide which REALLY is more important.

My realtor got an email from the seller:

"Thank you for submitting an offer on the above referenced property, however the Seller has decided to REJECT your offer at this time due to offer price being too low. If your client is seriously interested in pursuing the property, you may submit a revised offer to be presented to the Seller through their *********.com website."

I resent the implication that I'm not seriously interested. I could argue that seller(which was bailed out by my tax dollars) isn't seriously interested in selling the property.

You should have countered lower, 159K. That is the sign of power and banks have absolutely no power now in this game. One paper they are bankrupt entities. Your 159K in the positive make them envious.

It doesn't mean your bid is low relative to other bids, could be the highest. Is below the reserved price for sure. The seller is hoping that you would resubmit.

burritos says

"Thank you for submitting an offer on the above referenced property, however the Seller has decided to REJECT your offer at this time due to offer price being too low. If your client is seriously interested in pursuing the property, you may submit a revised offer to be presented to the Seller through their *********.com website."

Here is your reply

"My friend. Thank you a thousand times over for your consideration on buying this beautiful property. I am deeply saddened by the rejection from the Seller. If your Seller is seriously interesting in selling the property I encourage him to again consider this offer from a very serious buyer. I am willing to again offer to purchase the property for the large sum of $160,000, which is very generous considering the current state of the housing market and the overall economy. This offer is only valid as long as I have the means to extend it. There are multiple competing properties on the market and I have many bids outstanding. The first serious Seller to accept my cash will be the winner.

Your truly,
Serious Kickass Buyer"

The problem is you should never counter above your last offer price.

robertoaribas says

Obviously, there isn't enough info in this thread to know... If comparable rent is $1500 a month, and this home doesn't show any sudden need for major repairs (ie aging roof, old ac, etc. )

It looks like the home is in pretty good condition.

burritos says

1. Move in ready. I do have to buy a frig, washer, dryer, and a few blind(estimating 5k). No carpet, paint and wall repairs like I had to do with the grow house I got a year ago.
2. FMV is 180k for move in ready, though the last few that were sold, sold at 160k(they were fixers needing carpet, painting).

robertoaribas says

this is exactly the kind of nonsense that passes for advice on the now worthless patrick.net site.

It could be the home is a terrible purchase at 150K, or the deal of a century at 180K. Obviously, there isn't enough info in this thread to know... If comparable rent is $1500 a month, and this home doesn't show any sudden need for major repairs (ie aging roof, old ac, etc. ) Then a buyer at 180K, depending on tax/insurance, hoa etc. could be looking at a reasonable return even at 180K. with AZ tax and insurance, I'm seeing a mortgage close to $1000 a month with 20% down...

The buyer would be far ahead of the renter in short order...

I think the money would work, but my realtor thinks there's still a significant shadow inventory that'll be coming down the pike. She says I should hold firm at my offer, though I doubt she'd be against my offering more.

The best deals I got in RE (not a lot of them) were ones I had to outbid other people and pay well OVER ASKING PRICE and this was pre bubble. (2001)

Robert is right - so much bad advice here.

Its only a clueless noob who would think 'never pay asking price' is good advice. As if asking price is market price! Sales price is market price.

It all depends on the asking price. At Patrick.net, most people are from CA and have the CA RE mindset (overpriced RE.) In other places where the prices are much more affordable and closer to bottom, the stories are different. I just DOUBLED the asking price here to outbid 10 other people or so on a foreclosure and I'm still looking at a return (rental property) of 10%-15%.

burritos says

I think the money would work, but my realtor thinks there's still a significant shadow inventory that'll be coming down the pike. She says I should hold firm at my offer, though I doubt she'd be against my offering more.

significant? That is an understatement. Schiller just said we might not see the housing recover in our lifetime. I completely agree. Any asking price today is tomorrow laughable price. Store the cash! Wait until you can buy two houses for that price. All the advice from people leveraging up on housing will prove to be the worst you have received. Let them lose their shirt because of their greed. Keep your cash (hardly anyone has any that bought over the last 10 years), and wait out the stupidity of multiple bids, unreasonable sellers, etc. You have all the marbles, they have none.

PockyClipsNow says

pay well OVER ASKING PRICE and this was pre bubble. (2001)

If you think that 2001 was pre-bubble, then you are the clueless noob, around here. Prices are already back to 2001 levels or below, in a lot of areas of the country, and, if you paid above asking price, back then, you are already looking at a lost decade, and, you will get at least 2 more.

E-man says

$6k difference in purchase price is equivalent to $30/month in mortgage payment. Is it worth getting or not getting the deal?

That's not the point. Why would he want to offer even one cent above his initial offer, if he knows that he will be getting a much better deal 1 year from now?

E-man says

$6k difference in purchase price is equivalent to $30/month in mortgage payment. Is it worth getting or not getting the deal?

This argument is just wrong. It is used in the housing and automotive industry by sellers all over. Hey, don't look at the cost, look at the increase in monthly on the credit. So, why can't you argue the opposite. If it works one way then it works the other. 6K less on the purchase is only $30/month to the Seller in a dividend fund that pays the same as a mortgage rate. Are you not going to sell your house over $30/mth.

Down right criminal argument, and I feel like shoving a tire-iron up anyone that uses it on me when I make a purchase.

RentingForHalfTheCost says

significant? That is an understatement. Schiller just said we might not see the housing recover in our lifetime. I completely agree. Any asking price today is tomorrow laughable price. Store the cash! Wait until you can buy two houses for that price. All the advice from people leveraging up on housing will prove to be the worst you have received. Let them lose their shirt because of their greed. Keep your cash (hardly anyone has any that bought over the last 10 years), and wait out the stupidity of multiple bids, unreasonable sellers, etc. You have all the marbles, they have none.

Well. There is a somewhat limited supply. The area I'm buying is in a development of about 1100 homes built and sold in the bubble(2004-2008). I'm betting that a lot of people who originally got into these homes probably did so via 5 year ARMS or I/O. We are in the final years of these recasts. Obviously not all homes go in to foreclosures because of this reason, but this is something we as investors(vultures) can count on. I've been following this area since 2005 cause mistakenly, I bought one in the peak. While I've lost a ton of equity, the carrying costs are covered by the rent. On principle, I'd like to get the price that I've arbitrarily set in my mind to purchase at. After all, I pay a lot of taxes and some of those taxes bailed out fannie. Also, I'm insulted that they imply that I'm not a serious buyer. And there aren't multiple buyers, cause it really is hard to get a loan these days. OTOH, if I were to buy at their asking price, I'd still get more monthly income(with this financed investment) than the interest in a t-bill or my ING account. And while I'm not Apple with 50 billion in cash, I don't like too much cash sitting in the bank doing nothing. Decisions decisions.

burritos says

OTOH, if I were to buy at their asking price, I'd still get more monthly income(with this financed investment) than the interest in a t-bill or my ING account. And while I'm not Apple with 50 billion in cash, I don't like too much cash sitting in the bank doing nothing. Decisions decisions.

Don't compare it to the t-bill or ING account interest. That is all just as funny as the housing market. They are one in the same. If you believe in housing then you must believe in Corporate America. I just believe in Corp Amer. In that logic you at least need to compare the chores and risk of being a landlord with a low-risk 7% appreciation.

http://seekingalpha.com/article/525531-investing-in-coke-the-7-solution-for-rookie-ira-investors?source=yahoo

I've been using the technique of writing covered calls and collecting dividends all through this credit crisis and enjoying much higher than 7% return. Obviously, I am not leverage 10-to-1 like housing lets people, but that is the way I like it. I envision the greedy investor on the other end who is buying my calls hoping to get-rich-quick. Better to make money off these people and keep your savings adding to your power to take advantage of Greed. I'm sure some people buy calls for protection, but I bet many do it for greed.