Here is the latest Undoor acquisition, details and analysis!

Deal Highlights - St Louis, MO Property

• Single Family - 3 bed - 3 bath - 962 sqft - MLS listing

• Purchase Price: $117,605

• ARV: $139,000

• Monthly cash-flow: $276

• Cash on cash: 11.3%

Deal Details

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A bit more for the interested. We noticed this property show up on the MLS, listed with other properties the same day by the same agent, all of which were tenant occupied. We figured these are likely the same seller, an investor, maybe in some pain, looking to off load the properties. The property looked in great condition. The listing agent provided a ton of supporting evidence of the tenants being great payers. This implied the seller wasn’t looking to sell at a steep discount. We extended the offer with inspection contingencies and rental rider. Both of which gave us opportunities to vet the deal and potentially back out if the property condition was not satisfactory or if there were any issues with the tenants. Both came back clean. Regardless, now that we had the property under contract, we decided to negotiate with the seller based on inspection report findings and previous jobs as evidence of cost. The ultimately agreed to the $4700 in credit, half of which went towards paying the closing costs, the other towards reducing the purchase price. We remain at 100% success rate negotiating the price down after the seller accepted the initial offer. The key is for that initial offer to be just enough to grab the seller’s attention.
We knew from the start that the current rent was under market and knew that the current lease expires in 4 months. We offered on this property knowing with a relatively high degree of confidence, that we should be able to bring the rent up to market. Our $1300 above is extremely conservative as we had a recent turn that previously rented for $945 a month last year that rented in 4 days for $1300 (it was a smaller property than this purchase). That’s how quickly and drastically rents have been raising in our market. We may even try to use Dion’s Binder Method to get the tenants to ask for a rent increase!

On to the next two in a package deal we have under contract. We found another motivated seller on the MLS. More to come on those when/if we close. Happy to answer any questions in the comments if there is interest.

What We Learned From This Deal

• Sellers are more likely to negotiate when the property is under contract.

• Interesting combination and use of seller concessions with half paying closing costs, the other reducing the purchase price that ultimately left more money in our pocket and retained great ROI numbers.

• Sellers who have good paying tenants in their properties aren’t as motivated to sell.

Detailed Property Analysis

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