Made Offer Now What?
I found a SFR with the help of my realtor. listed price at time of offer was 85900 I offered 76150 as it only needs about 6000 in fix up cost. Listing broker lowered price to 82000 the monday after my offer was presented to her. Bank owned REO , countered at 79900. my realtor thinks I should take it at that price. This SFR also as an extra lot that can be sold or put up another SFR with getting a variance on the lot demensions. Most homes in this area go for about 85000 to 90000 ARV. Should I go with counter or stick to my guns at 76150?
Are you purchasing this house to live in, rent out, or flip. Either way, it sounds like a tight deal. Even if you purchase for 76k- you still need to put in 6k rehab, plus closing cost, plus commission and holding cost if you plan to sell. It looks like you would be losing money here if your plan is to buy, fix and sell. I would keep looking for another property that you can get for at least 30-40% under FMV.
Hope this helps some.
neutral
Hello.
Ok, We bought a rehab with an additional lot. It was large enough to parcel off and put up for sale. We'll bring in 20k just for the lot.
Now, let me look at the numbers. 76+6 = 82...
85-82=3. 90-82=8. That is tight. I'd look at the comps to see how long you'd have to hold the house until it sold (holding costs); then I'd find out how much you could get for that lot. IF I could get 20K for the lot, I'd do the deal. Then I'd Lease Option the house out.
5k down from buyer, 300/mo over you're mortgage and 10% over current FMV (you'll sell it to'em in two years, hence the 10%). Give them 100/mo towards their down payment.
You get 5k back of the 6k you put out. What's more, you get 200/mo over your mortgage AND, in two years, you get 10% over the sale price (8,200 to 9,000)!
This way, you'd make up for how tight this deal is. But, that lot would have to be able to parcel, or I'd consider not going forward with the deal.
Just a thougt.
Thanks,
OnTheWater
Thanks for the replay, Yes I was going to buy and hold and rent out. Extra lot can be built on but would have to get a variance as it is 10 feet shorter in width in todays building codes. Lot should be worth 15-20. I would pay no closing fees as my realtor/investor puts that in all of his investor offers for properties.
You can afford to pay a little more if you are keeping property. Inflation will be your best friend. I would be concerned about what the rent and payments will be to see if it will cash flow. If it will make money with little cash out of pocket or if you can refinance and pull your cash out it may be a great deal. Rates are low but rents are low in many areas too. Do your homework to make sure it will make money for you now.
Good LUCK and Thank You
Hope this helps some
Ted Jr
Concerning the potential building lot...
You mentioned that if a subdivision were to take place, the vacant lot wouldn't comply with min. lot width requirement of the zoning and thus might need a variance.
If you haven't already done do, you might want to see if there's some alternative layout that would eliminate the need for a variance (e.g., flaglot configuration) or minimize the relief you'd need in a variance.