I saw a house today that is a short sale.
2 family house on a double lot
Seller put it up for 295k but as I said its a short sale.
House needs some work I estimate around 10-20k. check the issues below and let me know if I'm way off.
How low can I put in an offer on a short sale? I honestly don't think I want to pay more than 260k to 270k for this property.
Here are couple of things.
- Huge tree in front of the house (very large tree). Branches are almost touching the roof.
- 1 bathroom needs renovation
- kitchen floor need to be fixed. Currently laminate floor and its peeling off.
- A lot of laminate floor throughout the house
- Some leak from 2nd floor to 1st floor.
- Outside cedar shingle siding peeling off.
First of all, and this is probably the number one most important rule for making an offer...Never, as in NEVER ever, make an offer based on what you think it will take to get the property. Only make offers based on what it will take to make you money. If you based it on what it takes to get the deal, and the result is less profit (or worse) or lower (or no) cash flow...why would you want it?
B. Repair costs
C. What is house worth to you?
Originally posted by @Seth Sherman:
B. Repair costs
C. What is house worth to you?
Here is what I would add to your list.
- Profit desired (pay yourself first...or don't bother)
- Repair Cost
- Misc expenses (i.e. could have a partner involved, assignment fee, etc...)
- Financing cost
= Maximum Offer
Mina NA are you planning on doing a lot of the work yourself? From what you listed that needs to be done I would estimate to be a lot more then 10-20K for your area pending on the extent of damage. Whats the ARV and rental income? What are you looking to do with it; buy and hold, fix and flip?
Thanks for replying.
I'm planning on buying and holding. I will rent my current apartment and live in one of the units and rent the other unit for $1300.
The bathroom reno and the kitchen floor I will do myself. for the rest of the laminate flooring I will see the condition of the hardwood floor under. If its in ok condition I will sand, and stain myself as well. I know I can do the bathroom for $1500, kitchen floor 500, sand and stain hardwood floor $200. again this is stuff I can do myself. the rest I will need to hire someone to do.
If I would to rent both apartments I would net 400-500 per month with my offer of 265k. But I actually want to live there and rent my current apartment. (in a duplex as well). So I will be netting the same on my current house if I do that.
Originally posted by @Shawn M.:
@Mina G are you planning on doing a lot of the work yourself? From what you listed that needs to be done I would estimate to be a lot more then 10-20K for your area pending on the extent of damage. Whats the ARV and rental income? What are you looking to do with it; buy and hold, fix and flip?
How much do you think it would cost to trim the tree? its big but I dont think more than 500?
I have no idea how to estimate the cost of replacing the siding of the house.
the leak from the 2nd floor into the 1st floor seems like it is from the siding since its in the corner. But the owner said dishwasher leaked.... I didn't find any dishwashers in that area when I got up there.
I don't know if vynil siding is used much in your neck of the woods, but here in Okieville it is and around here it would run around $2 to $3 per sq ft installed. Obviously, that,s $200 to $300 per 100 sq. ft.
To me, the plus's are that the existing siding can remain as long as it's generally sound (nailed on good), And, when installed, it's done (no painting/maintenance.
I do short sales all the time. There are two hurtles I have found with short sales.
- Seller to Accept Lower Price -The first one is getting the seller to accept a low price. This can be easy or hard.
- Easy- If the owner just wants to get rid of it than they will often take any price to get ride of the house.
- Hard- If you have multiple offers or they are trying to get the higher offer possible in order to prevent their tax burden
- Bank to Accept Lower Price- Honestly this depends on the banks BPO, the bank and what it is worth. I have found this to be a "crap shoot"
All in all we love short sales. I truly don't call it "mine" till we have signed the final papers. So it is certainly not short or without risk.
Mina NA siding itself can be very costly. The cost to replace it I don't have an exact estimate for you but cedar siding is not cheap. Trimming trees should be under 500 I would think but once again not sure the size of tree and extent thats needs to be cut.
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