How to Make an Offer on an Investment Property: Price, Terms, and the Four Structures

Most investors make offers backward. They start from the asking price, pick a discount that feels bold but not rude, and hope. If the seller says no, they either walk or creep up in $5,000 steps until the deal stops making sense.

Here is the process in the other direction. Start from the number where the property works for you. Measure the distance to asking. Read the seller. Then choose an offer structure sized to that distance, and write it once. This is the pillar for our offers and negotiation series; the Lake Worth teardown and the Subject-To pitch script are the field examples.

The process in one view#

1. Find your number (Target Buy) for the strategy you would actually run.
2. Measure the gap between asking and your number.
3. Read the seller: equity, loan, days on market, motive.
4. Pick a structure sized to the gap and matched to the seller.
5. Write the offer with the seller's win stated first.
6. Plan the follow-up. Most investment offers close on the second or third conversation.

The property below runs through all six steps.

Step 1: Find your number#

Your number is the Target Buy: the highest price at which the property meets your return threshold at the terms you will actually use. It is not a discount; it is solved from the property's income. The mechanics are in how to analyze a rental property.

At an 8% cash-on-cash target on conventional terms, this property's Target Buy is $270,731. Check: loan $216,585, payment $1,299, NOI $20,564, cash flow $4,981 on $62,268 invested. 8.0%, DSCR 1.32.

Write that number down before you look at anything else. It is the only number in this process that belongs to you.

Step 2: Measure the gap#

Deal Gap = ($325,000 − $270,731) ÷ $325,000 = 16.7%, or $54,269

The Deal Gap is the size of the problem. It also tells you which family of solutions is big enough:

At 16.7%, this property is a structure deal. A straight offer at $270,731 on a 74-day listing with one cut might land; on a fresh listing it would not get a counter.

Step 3: Read the seller#

Four facts about the seller decide which structures are even possible. Get them from the listing agent, public records, and the conversation.

Equity. $325,000 asking against a $214,000 loan is $111,000 of equity. Enough to carry a second; not so much that the seller has no mortgage to consider.

Existing loan. 3.25%. That rate is an asset worth roughly $500 a month against today's rates. It makes Subject-To or a wrap worth discussing.

Time on market. 74 days and one reduction. The seller has met the market once and lost. They are past the "test the price" phase.

Motive. Ask the agent directly: "What does your seller need to have happen?" Relocation, an estate, a tired landlord, a payment they cannot carry. The motive tells you which win to lead with: cash, speed, price, or relief.

Say the answer is: owner-occupant who has already moved for work, carrying two payments, anchored on getting "their number" back because they paid $310,000 two years ago.

Step 4: Pick a structure#

DealGapIQ surfaces four offer structures on every property. They are not four random ideas; they are the four ways the gap can be closed, and they map to seller types.

Structure 1: Verify or lift the rent#

Not an offer; a check. If three comps support $2,750, NOI rises to $20,900 and Target Buy rises to about $286,000. The gap shrinks to 12% before anyone negotiates. Always run this first. It costs nothing and sometimes the gap was a data problem.

On this property, assume the comps hold at $2,600. The gap stays.

Structure 2: Price#

Offer at or near Target Buy: $270,731, round to $270,000. Clean terms, 21-day close, inspection contingency only.

The seller nets $270,000 less costs. Against a $310,000 basis, this is a loss they will feel. On a 74-day listing it is a real offer, and the right one if you are willing to lose the property. It is the wrong lead for a seller anchored on their number.

Structure 3: Creative finance at full price#

Pay the seller's number. Change the money.

Seller carryback: $325,000 price. Bank first at 65% ($211,250 at 6.0%, $1,267/month). Seller carries $48,750 as a second at 0%, payments deferred, balloon in 5 years. Buyer puts 20% down.

• Seller gets full price: $276,250 at closing, $48,750 in year five.
• Buyer cash flow: $348/month, cash-on-cash 5.6%, bank DSCR 1.27.

Subject-To hybrid: take over the $214,000 loan at 3.25%, pay $60,000 cash toward equity, seller carries $51,000 at 0% over 10 years ($425/month).

• Seller is relieved of the payment they cannot carry, walks with $60,000, and receives $51,000 over time.
• Buyer's total debt: $1,044 + $425 = $1,469/month. Cash flow $145/month on about $63,250 in. The 3.25% loan is doing the work.

Neither structure cuts the seller's price. Both cut the buyer's payment. The full menu, including wraps, lease options, and the Morby Method, is in the Creative Finance Field Guide.

Structure 4: The blended plan#

Three small asks instead of one large one.

• Price: $315,000 (a 3% trim, not a 17% cut).
• Seller second: $25,000 at 0%, 5-year balloon, so the bank first is $227,000 at 6.0% ($1,361/month).
• Rent: documented at $2,600 with comps in the offer package.

Buyer cash flow: NOI at $315,000 is about $19,590; debt service $16,333; cash flow $271/month, cash-on-cash about 4.5% on $72,450 of down payment and closing costs (the Target Buy return is not fully met; the blended plan trades some return for a much higher chance of yes).

Seller nets $315,000 with $290,000 at closing. Against $325,000 asking, that is a 3% concession plus a wait on $25,000. Against a $270,000 cash offer, it is a different universe.

Which structure to lead with#

Match the lead to the motive you found in Step 3.

For our seller (moved, two payments, anchored on $310,000+), lead with the Subject-To hybrid: it removes the payment they cannot carry on day one, and it gets them over their number when you count the carried $51,000. Hold the blended plan as the fallback if they will not leave the loan in place.

Lead with one structure. Mention that there are others if they want a different mix. Do not present four options in the first conversation; the seller will freeze.

Step 5: Write the offer#

An investment offer is a purchase agreement plus, when terms are involved, a financing addendum. The agreement is standard. What you control is the cover letter and the order of information.

Open with the seller's win. "Full price. Close in 14 days. You stop making the payment on day one." Not "we'd like to propose a Subject-To structure."

State the structure once, in plain words. "The existing loan stays in place and I make the payments to the lender directly; you receive $60,000 at closing and $51,000 over ten years." Name the technical term after the plain description, so the attorney knows what to draft.

Attach the evidence. One page: rent comps, the expense assumptions, and the resulting payment. This is not a negotiation tactic. It is how you show that your number is a calculation and not a guess about what they will accept.

Keep contingencies that protect you and drop the ones that do not. Inspection stays. Appraisal can go if your comps are tight (and on a Sub2 there is no lender to appraise for). Financing contingency: none on a Sub2 or full seller carry, and say so; that certainty is worth money to a seller who has lost a buyer before.

Set the timeline. A specific closing date. Sellers respond to dates, not to "quickly."

Involve the attorney early. Creative structures need documents that an agent's form set does not include: the note and mortgage for the second, the Sub2 disclosures, servicing instructions. Have your attorney's name in the offer.

The words to use out loud are in the Subject-To pitch script.

Step 6: Plan the follow-up#

The first answer to an investment offer is usually no or silence. That is not the end; it is the seller's first data point.

• Ask what would have to change. Not "what's your best price," but "which part doesn't work: the cash at closing, the timing, or the carried piece?" The answer tells you which lever to move.
• Move one lever, not all of them. If the objection is cash at closing, raise the cash and lengthen the carry. If it is the carry itself, shift toward the blended plan. Every concession should trade for something.
• Set a calendar reminder. Off-market and long-DOM deals close on the third or fourth conversation, often 60 to 90 days later, after the seller has tested the market again and come back. Your offer should be the one they remember as the one that solved their problem.
• Know your walk-away. Your Target Buy on clean terms, or the equivalent return on structured terms, is your floor. If the conversation crosses it, stop. The next property has its own Deal Gap.

The mistakes that lose deals#

Offering a percentage off asking. It tells the seller nothing about the property and everything about your tactic.

Leading with the structure's name. "Have you considered a Subject-To?" ends the conversation before it starts.

Presenting all four structures at once. One lead, one fallback. Options paralyze.

Splitting the difference from a number you never believed in. If your Target Buy is $270,731 and you open at $250,000 to "leave room," you have taught the seller your first number is not real, and now none of them are.

Skipping the rent check. Sometimes the gap is a data problem, and a comp check closes it for free.

Making a structured offer without an attorney and a servicer lined up. The seller's agent will ask who is drafting the note. Have an answer.

What this looks like in DealGapIQ#

Run any address through Discovery and you get the Target Buy and Deal Gap for all six strategies, the four offer structures sized to that gap, and a pitch script with the property's actual numbers. The Deal Maker lets you adjust the carry amount, rate, term, and balloon and watch cash flow and DSCR update, so the offer you write is the one that pencils.

The price tag is not the deal. The structure is. Find your number, measure the gap, read the seller, pick the structure, write it once.

We analyze. You decide. Not financial, legal, or investment advice. Speak with a real estate attorney in the property's state before making a seller-financed or Subject-To offer.