I offered %40 of the asking price! What now?
Hello Bigger Pockets,
I am a United States Marine, and i've been looking to break into small multi-family investing for a few years now. After a lot of research and analysis, I have finally put in my first offer!
The property is a 5 year old duplex in Southern Missouri. Each unit is 1800 sq ft with high end features, such as: Granite counter tops, top of the line cabinets and vanities, 10 ft ceilings with crown molding, top of the line appliances, wide open floor plans with travertine floors, 3 beds 2.5 baths with a garage and an upstairs balcony. VERY NICE units in a B+ neighborhood. Heres the catch...
This property is a foreclosure listed at 230k. Only one side of the duplex is currently rented out, and to a Section 8 tenant playing a mere 800 per month. Their lease is up in January 2016. The comps in the area state that this property should bring in at least 1100 per month.
The exterior needs some maintenance, mostly cosmetic including minor water damage on trip boards and paint. The driveway was never completed from the original construction. The interior needs minor touch up as well as paint and new carpet in the upstairs.
My contractor did a walk through and estimated the repairs total 60k. I could honestly do all but about 20k of the work myself as I live in one side for a year.
On top of that, the listing agent knows the bank president personally, and has practically begged us every day for the past few weeks to put in an offer, ANY OFFER.
So I did. Considering all of the above, using the rental property analysis tool here on Bigger Pockets, I can afford to pay 150-160k max for this property. All while taking into consideration the lower than market tenant for a few months, repairs and all other costs of occupying this property.
From the asking price of 230k, my offer to the bank was for 140k, contingent upon inspection and appraisal. I pay my own closing.
The bank countered yesterday for 173k.
After discussing this with my lender, He stated that they would need to fix the exterior water damage before closing.
They are obviously taking my low offer seriously and are willing to play ball. Whats my next move? I was thinking of countering with 150k, same contingencies, and then in addition to add the water damage repair before closing. Any thoughts?