QUOTE (investsmart @ Feb 13 2010, 03:31 PM) Thomas is right. Greg, unfortunately what you are really saying is: I will lose a great deal because seller is lazy!why punish yourself due to his laziness? don`t you prefer buying the property and making tons of money?
Example (on purpose I will provide an extreme example which is sometimes the best way to explain things):
Seller asking 100K for a 4-plex with total rent of $500.
you know all other 4-plexes in the neighborhood are sold for 400K, generating rent of $4000
you also know the owner was lazy, owned for 50 years and never increased rents.
Cheers.
I fully agree with your example. What I avoid is a seller that attempts to push there sale price much beyond your extreme example. IN your example $100,000 is definitely a good price where as $200,000 is obviously lunacy.
For me, because of the ridiculous RTA restrictions, it is very risky to simply assume a upside can be easily achieved which tends to put me off of deals that are marginal based on the potential upside.
A great deal is a great deal but a deal that prices a property much beyond the value of it`s present income is not something, in Ontario, I would be interested in generally speaking. In addition I place no value, in regards to purchase price, on future appreciation. My emphases is on buying below market to built immediate equity. Appreciation is simply gravy.
Otherwise I pass because I believe there is always another deal around the corner.
It is very important in Ontario, where for example tenants have the right to move back into there previously occupied unit for virtually the same rent following a extensive renovation, that investors look beyond the price.
I admit I would consider paying a slight premium to a lazy LL but not without serious reservations and to this point in time have not found a good enough deal to do so.