Two real-estate pros turn down a rejected $2.9 million offer by dropping the $800,000 carry and coming back with $2.1 million straight cash. They argue the property's 7% cap rate and outdated car wash justify the lower price, and note that brokers must legally present all written offers.
We got an email back where they're like, we're not even, we're not even in that reality. And they're like, they're like, you don't even have any skin in the game. And you are only asking for an $800,000 for a carry. And there's no, you don't even have any skin in the game. What I responded to you was how much is the property? Like, what is the asking price? Cause I know you made an offer at like $2.9 or something like that.
Uh-huh.
And then when we ran the numbers, like the numbers don't add up because they're almost going broke as is, right?
Correct. The asking price is $3,737,000.
Okay. So here's how we do this. We say, okay, great. We'll come in at the 2— we'll come in at 2.1 where it's justifiable. And here's the cap rate to that. We show them the number, right? Because the numbers they have were really confounding. Right? So we straighten up the numbers for them, send that back and say, here's our cash offer. By the way, we're a private equity firm. And they go, because now they have to present that offer. And if they don't present that offer to their seller, that's illegal. All offers must be presented in in writing to a seller. And if they do not do it because they're deal blocking, then they are what's called a fiduciary agent, or basically they're no longer a transaction broker. So that's what I—
so would I re-edit the LOI to a different form, or what's the best way to go about this?
At that point, I would respond like, let's go ahead and run the numbers again, get it to say why to get Deal Hunter to justify the 2.1.
So drop it down because we're originally that message that we sent was 2.9.
Now we're going to even drop it even lower to 2.1 more because you wouldn't even consider the $800,000 carry. So let's remove the $800,000 carry, which brings it down to 2.1 instead of 2.9.
It would just be straight cash and would it be fine?
Cash, but close the 90 days after due— close after a 90-day due diligence period at 2.1.
Okay.
And then we justify it with the numbers and say, here's the numbers. This is why we're doing it this way, because your cap rate is 7%. On our bullshit numbers are bullshit. And the 2% increase on lease and all that, insane. And if this company goes out, you've got an outdated, outdated car wash there. The car wash is outdated. Nobody does the self-cleaning car washes anymore. They want automated car wash and people doing the car wash and washing the car. They— so you need to build a lounge on that property and extend it and make it to where people can just pull in and get their car washed and they don't have to do any work Boom, done. And so that's why we're offering a 2.1 is because we got to redevelop it.
Right. Okay. Sounds good.
So, and then again, like you're, we call it fishing because you threw it, you threw the, you threw that out there and he's like, absolutely not. I'm not even going to entertain that. So then give him an offer he has to entertain. He said he wanted cash. Okay. Here's a cash offer. Now bring it to your seller and tell me why they won't do it. Here's the numbers and just, it's Monopoly, right?
