Latest Acquisition & Analysis - Splendor
Rental in St. Louis
Here is the latest Undoor acquisition, details and analysis!
Deal Highlights
Single Family - 3 bed - 3 bath - 1,470 sqft - MLS listing
Purchase Price: $112,650
ARV: $158,000
Monthly cash-flow: $224
Cash on cash: 7.1%
Deal Details
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A bit more for the interested. This was offer 4 in the same week. First 3 properties we got outbid on. We decided to make offer 4 stronger by going in with a higher EMD (5% instead of standard 3%). We also decided to go in with a cash offer at the max price where the deal still made our numbers work with the intention of waiting on the inspection report to negotiate the price down. We heard somewhere that sellers are more likely to agree to a negotiated price down once the property is under contract. So we tested that theory out and it worked great (and we were lucky). Our agent wanted to be more conservative but we went in listing almost everything the inspection report had found. We also had previous job quotes to back our numbers. The seller immediately accepted our price reduction, no questions asked. Since we had no intention of leaving our cash in that property, we started working with a mortgage broker a few days before close to get delayed financing (immediate cash-out refinance without the typically required 6 month seasoning). That is now underway, and we should be getting back 75% of our funds within a few weeks. That is also why we got a 4.125% rate instead of 3.625% had it been a purchase instead of a refi. When we ran our yield numbers for this cash purchase knowing we’d refi, we did so assuming a 4.5% refi rate which we knew we could get. The only reason we purchased cash was to have a stronger offer due to the current market. In less competitive markets, we would have purchased with financing out of the box.
On to the next one.
What We Learned From This Deal
Sellers are more likely to negotiate when the property is under contract.
Stating the obvious, but cash deals with higher EMD have more traction in a competitive market.
People make mistake: despite having the correct instructions, our bank made a typo an wired the incorrect funds amount… yes it happens, so check on both ends!
Detailed Property Analysis
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