There’s a property I have in mind for a quick rehab whose price is listed for $230k (my comps are in the $255-260 range). I actually know the owners equity situation – they only owe about $60k. But the house is in need of serious repair – it needs a new roof, siding, windows, it has ‘dips’ and soft spots in the floor, leak stains in the ceilings of just about every room, and NOTHING has been done with the kitchen or either of the bathrooms in the 40 years the house has existed.
I’m thinking of making an offer of around $175, along with a listed of expected repairs to explain why the offer is so low.
So it got me wondering, what’s the most ridiculously low offer you’ve made on a house you know is in need of repair? Did you include a list of repairs to justify that offer? And what was the immediate reaction of the owners/realtors?
That offer still sounds high with that much work to be done. The longer it sits for sale the more open they’ll be to low offers. The important part of the offer is to offer a little below what you can pay and make an acceptable profit. That way you can respond to a counter offer. Sure, you’ll get offers rejected but who cares. Paying more so you get the house but don’t make any profit isn’t useful.
I bought a large duplex being offered for $49K for $11,000. I also bought a 3 bedroom house with fire damage in the kitchen roof for $10,000. I thought those were pretty good until one of the guys from the REIA bought a house for $300.
You call that rediculous? For starters if ARV is $255k you are at $178,500 with 70% of ARV. Now due to the softening market in most areas of the country you want to have a little more buffer, let’s say 65%- $165,750. Minus your repairs, that sound extensive, and you’re down around $100k (not $175k). If by rediculous you mean high you’re right.
So what do you shoot for in terms of profit in situations like this?
My offer shouldn’t be more than $100k? If you could, give me your basic rundown of how you’d determine your offer for short term rehabs. Expected expenses, other factors, that sort of thing. It would be much appreciated.
I posted here several weeks ago about a HUD f/c I was following. It started at $43,000, and dropped steadily over the course of a few months to $25,000. It was still a little high for me. didn’t need much work (probably $5k-$10k), but still a little high after all said and done. Someone bid $3k and won it. :banghead