Every time I help someone buy an apartment building, we get to a moment where we need to figure out what our “best and final” offer will be.
Literally 100% of the time, my client asks me what I think it should be. And this is maybe the one question in the entire process I can’t answer. At the end of the day, you, the buyer, need to decide what a building is worth to you. Because, after all, it’s your money that we’re putting at risk, not mine.
I can do is help frame the decision financially. I can help you figure out what similar assets have sold for. I can give you a sense for what the rents are and where I think they’re headed. I can help reassure you as to the condition of the building. And I can help you estimate what your returns should be.
There’s one more thing I can do, which is to give you the following bit of wisdom I’ve learned the hard way over the past few years: Don’t try to steal the building. Figure out what the highest price you can pay such that, if someone beats you, you’ll say “God bless you” and walk away from the deal without feeling bitter.
If you do your homework, really come to grips with the deal, and offer the absolute best price you can, then you’ll be able to live with whatever happens.