Rental Property Investor · Dallas, TX · Member since 2018 · 35 posts · 19 votes
I have a property that's a Foreclosure and the bank is wanting $60k for it. I'm looking at buying and holding the property to put a renter in it. It needs about $20k worth of work if I was going to flip it but less since I'm putting a renter in it. There are no properties that sale fast in the area. Last sale was about 160 days ago for about $65k.
Are the banks negotiable on their price? And if so what would be a good offer with the property needing some cosmetic work.
@Eldrick S. With most REO's, the decision makers are most interested in seeing clean offers that have a high likelihood of closing. Cash offers, 30 day closings, only the physical inspections contingency in place, are the best from their point of view. Include Proof of Funds. They probably won't be too interested in a repairs report or comps since they'll be relying on their listing agent to provide those.
@Alexander Felice thank your for this! Yes, it is on the MLS. The formula you mentioned, is that for buying and holding the property? Or is that for if I wanted to flip it? I'm looking at buying and holding the property long term and putting a renter in it.
@Eldrick S. Make the offer that makes the most sense to you. If this property isn't selling quickly, you might have a shot at getting it at your price. Be persistent. They'll be willing to drop their price if it makes sense for them, especially if the property continues to sit on the market.
@Alexander Felice thank your for this! Yes, it is on the MLS. The formula you mentioned, is that for buying and holding the property? Or is that for if I wanted to flip it? I'm looking at buying and holding the property long term and putting a renter in it.
You can usually pay more for a rental than a flip. The transactional costs are lower on a rental and while it's spread out over a longer period of time, you'll make a LOT more with a rental than a flip. All that said, don't volunteer to a pay a cent more than you have to ;)
@Eldrick S. Yes, depending on the market they can definitely be negotiated.
Interesting you mention $60k for the price, my last REO was listed for $63k, and had been on the market for a while. I offered $50k and asked them to cover my closing costs. The bank accepted.
@Tom S. This is great to hear! I'm excited for putting in this offer because I like the property and it would be my 1st investment property. Did you do anything different when you sent the offer? Put in estimated repairs report? Comps? Just trying to better my chances.
@Eldrick S. With most REO's, the decision makers are most interested in seeing clean offers that have a high likelihood of closing. Cash offers, 30 day closings, only the physical inspections contingency in place, are the best from their point of view. Include Proof of Funds. They probably won't be too interested in a repairs report or comps since they'll be relying on their listing agent to provide those.
@Eldrick S. I bought one similar, it was listed at 45k put in an offer at 25K ended at 30K bought it and had it rented in a week. For 850$/mo. Great cash cow.
A rapper said it “there is money in the ghetto”
@Mark Holmes wow this is awesome!! I just put an offer in on mine. They were asking for $60k and I offered $30k. It needs about $20k of work. They asked for proof of funds, so we'll see! Let's get these cash cows!!
@Kevin Sack they didn't accept. I put in 2 offers and they declined both with no counters. It's been on the market for 2 months now so if it sits for a few more weeks I'm going to put another offer in.
@Eldrick S. Hang in there and be persistent. As long as the property's still on the market, you have a chance. It's frustrating because the bank should be at least countering your offer. Unfortunately, you won't know exactly why the bank is doing what it's doing. A lot of times, decision makers look at what they need to net even when the market won't cooperate.
@Andy Mirza that's what my agent says as well. I'm thinking of increasing my offer a little just to see if they will counter. Normally when they don't counter, my offer is too low - per my agent.
@Eldrick S. How far apart are you? How much farther can you realistically go up without cutting too much into your profit?
I will do that, too, though. If an offer comes in too low, we won't even counter it. We have a good idea of market value and know when it's an unjustified, low ball offer. The decision maker in this case might not know what the real market value is based on its condition. A lot of times, they will start high and gradually come down when the reality of the market shows them what they can actually get as opposed to what some BPO tells them.
@Andy Mirza they want $60k. I originally offered $30k then offered $40k. They declined both offers with no counter. It needs about $10-12k cosmetic repair but is move in ready for a tenant. There aren't homes that have sold recently in the area. Based on the Sq ft $, once fully fixed up would be worth about $80k.
@Eldrick S. It looks like you have room to go up in price if you need to and I bet if you were in the 50s, you would get a counter. Do you know what your max offer is? (You don't have to tell me :)) However, before sending in another offer, I'd really get on your agent to reach out to the listing agent to get more info. Your agent needs to get the listing agent to indicate where you need to be at in order to make the deal happen. He or she should be able to get a verbal counteroffer or indication for you before you send in your next offer. The risk of waiting is that some other buyer can swoop in at anytime even in a slow market and get that property in contract for a price that you would've been willing to pay.
@Andy Mirza this is great information! I'm going to have the agent see if he can get a verbal counteroffer and go from there. $45k was going to be my max offer if they countered.
@Andy Mirza this is great information! I'm going to have the agent see if he can get a verbal counteroffer and go from there. $45k was going to be my max offer if they countered.
If I were the bank, based on what you wrote, I'd stick with $60K. You said it's worth $80M fixed. If you know that, they know that.
@Eldrick S. Any update on this prop? I would like to know how it shook out. This is the bad part of real estate investing. When you are new you get very high highs, and very low lows. I think that is why when you meet people that have been doing it along time, they dont get excited or depressed, very mellowed.
@Mark Holmes nothing new. It's still on the market. They lowered the price. If they lower it again I'll make another offer. They never countered my offers, just declined them.