How much should I offer and not be insulting
Sorry this is long, but bear with me.
I have a coworker who recently inherited a 3/1 house (built in 1928) from his in-laws on 1.25 acres in Post Falls, ID. It is in a trust that is being transferred to his wife soon. He has no interest in holding on to the property and sees it as a big headache. I told him I was interested in it as a rental until he told me that it appraised for 194k. There is about 20k left on a mortgage but no other liens. It is currently being rented for around 600, but could probably rent for closer to 1k given its location. Either way, as a rental it doesn't really make sense for me. As a flip, maybe... but he was told that the land could go for as much as 150k. Since the house is such a small percentage of the value, does it make sense pursuing as a flip?
A few details: 80’ wide lot, newer furnace, metal roof, collapsed out-building on the property that needs to be removed, needs electrical panel replaced (which I can do, assuming local code allows me to), needs siding or paint. It’s kind of just ugly and needs some TLC. Also, it is currently being surveyed to see if the neighbor’s fence is where it should be.
I think there is opportunity to make this deal a win-win for the both of us. I have about 35k to use right now, so my current thought on how to structure it is to put down 20k (enough to pay the mortgage off) then ask him to hold a note (with DOT) for the purchase price less down payment. 10-15k should give me enough to make necessary repairs, some cosmetic upgrades, and clean up the place for curb appeal. I could make monthly payments, with a balloon at 2-3 years. Then pay him off when I sell, hopefully within a matter of months.
What questions can I ask or information can I gather to help analyze ARV and end up at a decent offer price? I am working with a Spokane realtor to pull comps, but I don't know that that is sufficient to work backwards to an offer price. I know about the 70% rule and how that works. Anyone in the Post Falls or Coeur D' Alene (CDA) area that can help determine ARV?