Foreclosure as a rehab, or in worst case, for myself

I have been wanting to get into the REI biz for a little while now, but my capital is low and I have a full-time job. I have ALSO been looking for a home for myself. I have done some useful networking and a realtor that I met just contacted me about a foreclosure. It is on the market at $190k, very strong comps have ranged even recently from 185k-195k. He knows that the bank just made a counter-offer for 167,700. My thoughts are as follows. If I could get this home for, let’s just say, 170k, I could make very minor cosmetic repairs and paint the walls which the place really could use, and move in, but keep it on the market at 200k with intentions of selling at 190-195. If I don’t get a bite then it hasn’t really cost me much because it’s a home that I got a good deal on in the exact area that I want to live in so I could happily just live there, but if I do maybe I can make 10-20k on it and gain some experience and make a little money. What do you experienced investors think of this idea? I know it’s been done before, but am I being naive and missing too many of the hidden costs that would make it unprofitable anyway? I’m thinking that repairs will cost 2,000 max, interest on 145k, insurance, taxes, assn fees for the clubhouse will cost about 1150/month on a 30-year fixed. Then of course there are closing costs, etc. I assume that if I sell it after 3 months I will have spent 9,000, bringing my outgoings to 179k. Then if I sell it for 190-195, I could make 11-16k. Tell me what I’m not considering because I’m sure that it exists since I’m a newb. Also, tell me what WOULD make this deal profitable? Not using a realtor and avoiding commission fees? etc.

Jared - what direction is your market moving in? Comps may show 190k now, but what will they show in 3 months? in 6 months if you can’t sell?

My advice is, these days, you should be able to buy foreclosures way below market - I am doing it on a regular basis. Shop around - don’t buy the first thing your realtor brings you.

200 - 170 = no profit maybe even loss after commissions, closing costs, fees, carrying costs, etc.

you are way way underestimating your costs on this deal.

The only way you would be able to make money on this is if you get the $15k credit that’s being talked about, but I don’t think it’s passed yet. It might change from the current proposed form. I do think it has to be owner occupied though and you have to live it in for a few years, the details keep changing. This is a modification from the program of last year which was $7500 first time home buyer credit that had to be repaid over 15 years. 2k in repairs is way low, most foreclosures have at least 5-10k worth of repairs that it might need.