Two investors negotiate a distressed rental property deal, cutting the seller note from $500,000 to $400,000 and planning $100,000 in renovations. The property's asking rent of $650 is overpriced compared to $450 comps, putting the cap rate at 9% instead of a realistic 12%.
Right. So like we go out there and we fix, put $100,000 into it because it's all jacked up. That seller note goes from 500 to 400. Um, we're getting those bad service numbers. So based on, if they're making $54,000 before, then $35,000 is awesome. Right. So I like what the example is down there, performance-based down payment. Yes.
And then I told it the purchase price, all of that.
So the cap rate's around 9%. So a more achievable cap rate is closer to 12%. Again, when we ran the comps out there, they're going for $450. So at $650, he's overpriced, right? He may not know it because he's a fire chief and all that, so
