BiggerPockets

Not entirely sure what you're asking. There's not enough room for hard money. 70% of $42K is not even enough for the purchase price after points and closing costs. Looks like a decent conventional deal. Put down 25%, get a $22K loan and fund the rehab out of pocket. REOs won't be "seller financed", so that's not an option. You say you want to pull $5000 out, which I think means you'd like to get enough money to buy and fix the place and put $5000 in your pocket. That means you want to borrow 100% of the value which is 133% of the purchase price. Don't see that happening.

Hi Jon,

Thanks for responding. Is it unreasonable to get the bank to come down on the asking price? - they already made their money from the insurance. Where do you get a proof of funds letter? What are the LTV ratios of late? Also, the tax records show this condo and all the others around it (about 200) to be $60,000 - $62,000. My agent couldn't pull up any comps. The only ones selling are REO's (4 or 5). There are a couple listed for sale from realtors between $49,900 and $64,000. My agent suggested the $42,000 - $44,000 range for the ARV of this condo. It's hard to believe the tax records could be off by 30%.
Craig

Here is a link to what is used in the state of PA to derive an approximation to market value based on the tax assessed value (the state gets a cut of real estate transfer taxes, so they want to have a way to see if they are getting taxes on transactions as high as they expect to see); you'll see the numbers are all over the place...
http://www.revenue.state.pa.us/portal/server.pt/document/628207/clr_factor_historical_pdf

Yes, the bank will negotiate on price. However, in my experience, they will only come down a little. You might get them to $26-27K off the $29,900 list price. Some folks have said they have been able to get lowball offers accepted, especially if the place has been on the market a long time.

If you're going to buy it as a rental, you'll need at least 20% down, perhaps 25% or 30% depending on your lender. You would get a POF letter from your lender.

You would need to negotiate with your lender on rate, if you have a private lender. "Private" means someone you know. If you know someone who will give you 8% money, great. If you have to search and find some company, its not really private money, no matter what they call it. Rates are going to be quite a bit higher. Really tough to make rentals work unless you get to bank rates, current about 6% or a little less.

Tax records are useless for establishing a value.

The fact your agent can't come up with any comps is not a good sign. The appraiser for your lender will have a hard time, too. That will turn the appraisal, which can be troublesome in the best of situations right now, into a complete crap shoot.

Still don't know what you mean about pulling out $5000.

If you're looking for creative deals, you really need to be dealing with individual sellers. Your options are really limited for REOs.

Yep, periodically banks will just lower the price. now's the time to put in your offer. If they're at $25K your $20K offer should at least get a response. If not, bump up to $20,500 or $21K and offer again. If this is not a great deal, I'd think you could get it for $22,500 or so. If it is a good deal, there may well be other offers. I don't know enough about your market or the property to really say. You agent should be able to speak with the listing agent and get a feel if there are other offers and how much the bank might budge.

Since your father is going to live there, he may be able to get a pretty high LTV loan. FHA requires only 3.5% down and allows some seller contribution to closing costs. Banks will typically give some closing cost money for an owner occupant. 3.5% of even $25K is less than $1000.

They will use the selling price as the value. You'll need to come up with the rehab money separately. For $5000 and a property your dad is going to occupy, get a credit card.

Private money is just that. Private. Who do you know that would be willing to loan you $25K?

You might consider co-signing, if you're willing. If your credit is decent and you're willing to make the payments if dad won't or can't, it might be a way to get in.

Two things work against you on this. One, the loan amount is very low. Banks don't really like to do $25K real estate loans. They're a lot of work, and just as much work for $25K as $250K. Second is that its a condo. Have you verified its warrantable? Your mortgage broker should be able to determine this. Some projects that have too many non-owner occupied units or units owned by the same entity become non-warrantable. Its very difficult to get a loan on these.

Thanks guys for your input.
I need to find out what bank owns this. I didn't even think about the fact the seller might pay some closing costs. I just assumed it was not going to happen.
Also, where would I get the info for the HOA. SDo they have to show me a copy if requested? What numbers am I looking for to make sure it's a strong HOA? As far as looking for a private lender I'm going to make up a portfolio for this property. I'll take pictures of the condo from different angles, street view, surrounding grounds, lake, pool, tennis courts, etc.. I'm going to show the current value as well as conservative projected values for the next 1, 2, 3, 5, and 10 years. I'm going to interview the local Realtors association to get their ideas on values. I'll include a map of the area with access to major highways, proximity of shopping, churches and is also in one the much sought after top school districts in the state.
Also, I will show the ROI for potential investors for the same years as above.
I did the same portfolio on a duplex awhile back and gave it to someone I met at a Robert Allen seminar. I asked him to proofread it and give me his input. When he was done he asked "do you have a buyer yet?" When I told him "no" he said "I'll be your partner". It was a duplex for $55,000. One side brought in $600 and the other side brought in $550 which paid the operating costs of approximately $500. We brought in a little over $600 positive cash flow a month.

What is a special assessment? How do I find the financials for a HOA?
I lived in one of theses condos for 5 years. I was renting for $750/month. It is a nice, quiet area with people meeting eachother while walking their dogs or just taking a walk themselves. Lawns are mowed every week. In the winter the parking lots are plowed without fail as well as the sidewalks being cleared.
I have some knowledge of this area and that is another reason this would be perfect for my dad who just turned 86 the other day.

If you lived in this building, then contact somebody you know in that building and ask them who is the company that they pay their HOA dues to.

Even if you don't know anybody there, you might be able to ask a resident.

The listing agent probably knows some of this info; I say this since the HOA dues usually get put into the MLS listing in my area.

Some of the HOA documents become public record in my area; some of their documents might be at your county recorder. But don't expect to see the financials there.