EDIT: Would like to add something here… Commercial properties in any form or fashion are valued on NOI and cashflow, not a comp. Sure a comp is use to check if we are overpaying, but this is buying a business not a property that I or any other investor would expect natural appreciation. I dont care what someone paid for non-commercial property that used as a comp. Just like the bank and insurance company will treat this as a commercial property. I can about the business income and expenses to pay my loan and make money. But maybe I'm wrong here.
Need a sanity check here…
6 unit multi fam building here. 1930s construction, window units, class C area in the Houston Metro.
Asking $490K. Its been on market since Jan 2025 dropped from starting price of $525K. It needs about 10K a unit to get it up to speed, plus is in rough shape on the exterior.
Rents are $4945 per month, owner pays utilities of $12,900 per year, prop tax now is $4,449. That's all I was given. They have no P/L, no schedule E, no leases, no spreadsheet, no records of any sort. Nothing.
My lenders told me what I already knew. They will default to underwrite with 45-50% expense and want to see it how I outlined below:
I underwrote it at $59,340 income with 8% vacancy = EGI $54,593.
Prop Tax (Reassessment) 11,149
Management 4367 – 8% – Self manage but there is still costs to run.
Insurance 6000 – $1000 a door. Word of mouth quote.
Maintenance 4500 – 8%
Utilities 12912 – Actual Utilities costs
NOI = $15,797.
A 3.2% Cap rate at current ask that would not cashflow until year 5. I Submitted LOI for $285K, a more submarket appropriate 7.18% Cap.
My plan here is to very slowly over 4 years bump rents and charge back utilities while also making the unit upgrades in year 1 and 2. Becomes a great deal then, but with a lot of risk in my opinion.
I sent a explanation about lending standards and this property is un-loanable at that cost with LOI. The broker berated me on the phone about taking advantage of sellers right now and she is deeply insulted by the offer. The owner is a sophisticated investor and a lawyer. I asked what price is he looking for and response is close to asking or he will keep it. She told me banks have changed and I can easily get a loan for the property.
Is this the reality of the market right now? Do sellers really think they will get this amount for a distressed assets? It seems like they want turnkey price for my to take the risk of improving the property. I'm dumfounded here.
Broker Insulted by My offer on 6 plex
byu/ConstructmeDaddy6969 inrealestateinvesting
Posted by ConstructmeDaddy6969
24 Comments
That broker is delusional lmao, your offer actually sounds generous for that trash fire of a deal
The “sophisticated investor lawyer” who can’t produce basic financials is about as sophisticated as a bag of rocks – he’s gonna be holding that property for years at that asking price
First off the broker was unprofessional. That being said what are the comps in the area? If distressed assets are getting that or close to….thats a pretty important piece of the puzzle. If your offering below market none of your calculations you posted mean anything. When I sell something I don’t price it so it’s a good buy for you, I price it off what the market is saying it’s worth. By me you can’t even buy a lot without a building the size of an acre for under 600k
You say it’s distressed, 10k a unit isn’t a lot at all either
Honestly if you offered me 50 percent below what I was asking I would tell you to F off as well but my realtor is dead on with his numbers so…
“I’m not terribly interested in your opinion. You have a professional obligation to convey my offer.”
-Click-
Your NOI is way off imo. That property tax number is way too high even for Houston. insurance should be like $600/door or less not more, $4500 in maintenance sounds high unless things actively need repair, and an 8% management fee is also too high.
I would calculate it at $32K NOI at a 7 Cap = $457K value
Is it empty? I’d be tempted to tell the broker that you are insulted by her attempt to dump non-payers and below market leases on you by withholding documentation.
I mean you did your calculation but i would sell based on comps around the area regardless of what buyer or seller have in their personal sheet. Doesnt look like a good deal for the amount of work involved at the current offering
Word of mouth insurance rate per door is crazy bloated and you know that too. Anyways, look at the comps and valuation will be based accordingly.
As a non real estate investor I’m interested in the opinions here. My layman take is the seller doesn’t have to be rational they can choose to sell at whatever price they want or not sell as the case may be. My question is why are you wasting your time on this deal when the numbers don’t work, did you expect them to be receptive to your offer of $200k under asking when they only dropped the price $30k over the course of a year? Also, based on your tax reassessment I have to assume they owner has probably owned the property for a while, bought it at a much cheaper price and based on your description hasn’t put any money into the property. That might answer why they aren’t interested in your offer.
Unless there is some value in the land that you are not taking in……? I am an apartment broker and you are on the right track. Your expenses seem to be inline at $5,700 a unit – even maybe light. Are the rents significantly below market at about $800/unit? Some properties are just not sellable in this market. The owner should just take it off the market and try to improve the property himself. The only way he gets his number is if the rents were about $1,000 a unit.
One seller doesn’t tell you if you are or are not sane.
You’ve got numbers that make sense to you.
If you try on 10+ properties and everyone doesn’t even engage with negotiation then you’re unreasonable for your market, but that doesn’t necessarily mean you need to ‘pay up’ it might mean that you don’t want to invest in your market because you would value other investment vehicles more favorably.
If the higher prices DO still look attractive enough for you, then of course pony up and invest.
lol you submitted a 50% LOI? I wouldn’t present if I was a broker regardless. You’re wasting time. They could to 10 price reductions before getting close to you.
Youre overthinking it and will likely never pull the trigger because you think everything is overpriced.
It honestly sounds like there’s a personal connection between the agent and the seller. Maybe a family member or something. Don’t take it personally.
Stick to your guns and have them present the offer to the seller. Had a similar issue with purchasing a multi unit in the northeast, very small. I had to circumvent the actual agent by contacting the local real estate company that she worked for. It is their name on the sign.
Walking away is often winning the negotiation. Seller doesn’t have to sell you don’t have to buy. Not all are reasonable. No way to know if you or they are unreasonable though.
Some guys want and need to sale, some don’t and don’t care because they have the time and money to wait!
If that’s your best reasonable offer with the little information they gave them, rescind your offer, and keep looking! Don’t bump it up!
All the best!
You’re not crazy; you’re the only adult in the room. A 3.2% cap rate on a distressed 1930s Class C asset in Houston is laughable when risk-free treasury rates are higher. The broker is gaslighting you because she has a garbage listing with zero documentation… which no legitimate 2026 lender will touch without a massive haircut. Don’t let her bs distract you from the math.. she’s just frustrated she can’t find a sucker to pay a turnkey price for a project. Stick to your numbers, tell her the offer stands if they find their missing paperwork, and walk away. You’re being asked to subsidize the seller’s exit, not make an investment.
[](https://labs.google.com/search/experiment/22)
If I were seller, why would I sell to you even if your figure is real? Take 285k or keep my 6plex generate 7.18% based on your number, when I value as 490k, however you put it, 285k least attentive option compare to 7.18% return or self valued 490k. Or you gotta look at what’s on the market and ask yourself if today that property reduced to 285k, how many people will bid on it and how much will it sell, i bet it’s going at least 350k
Just like you feel broker insulted you, seller may also feel insulted, which I normally don’t care whichever party feel, but broker has right to felt insulted by low ball offer just like you have right to felt insulted by brokers response
If someone on the phone accused me of “taking advantage of sellers”, I would have a hard time not busting out laughing. That’s a new level of cope I could never have imagined
Without knowing what the actual comps are in the neighborhood there is no way of knowing if your offer is a fair deal or not. But assuming the current ask price has been static for many months it’s priced over market for what it is. Personally it sounds like a lot of work and headache for a Class C product. I’d walk.
Sounds like she wants a developer to buy it.
Umm, yeah. All of your machinations are meaningless. What does the seller want? Can you meet that price? No? Then it’s not for you. Thank you for your attention to this matter.
Tell them you’ll buy it at list price but it has to be 100% seller financed at a fixed 5% interest for 30 years.
“The owner is a sophisticated investor and a lawyer…yet they have no P/L, no schedule E, no leases, no spreadsheet, no records of any sort.”
Someone at the card game is bullshitting.
If you’re asking for a sanity check, then yes you’re insane for wasting time submitting an offer of $285k for something that’s listed for $490K. If the numbers don’t pan out for you, it doesn’t mean it won’t be worth it for someone else. If you’re offering 10-15% less and you’re trying to persuade a seller or his broker that’s one thing. But offering 60-ish% of asking price will normally get you bad responses.
Broker insulted? His job is to submit your offer to seller and let the seller decide. Broker seems concerned about his commission.