Newbie making an offer on REO (My First)

[Dawn Simpson]

Hi, I am newbie and am about to make an offer on a REO property. I plan to renovate while living in the house then either making it a rental or selling after a couple of years. The area is where I plan to buy and rent to build passive income.

I have inspected the property throughly twice. I saw foundation issues and have a bid for repair. Both bathrooms were flooded and will be a total gut. There is visible black mold in one bath.

On to my questions:

I will be making a cash offer. The listing price is $44,900. I am trying to decide what to offer given the foundation repair and black mold problem. Would an offer of $25,000 be too low? I had thought about offering $30,000 but my agent suggested $25,000 for wiggle room. I don’t want to lose out on this property due to too low of an offer.

This was my thought - offer $30,000 cash with POF, 10% EM, 10 day closing, with inspection contingency, include estimate for foundational work, and notation concerning black mold.

My other question is how much $ should my POF show? Should I have $30,000 the amount of my offer or more?

What do you seasoned investors think? Any suggestions or pearls of wisdom? Thank you in advance!

[Vyomesh Desai]

You need to make sure you budget for worst case scenario with the renovations, there are always skeletons in the closet. Also, I know you are excited about this new venture but take the position of "I will only purchase at x amount" and not "I don't want to lose out" (it will help you in the long run and keep from over paying)