Is 70-80% ARV (minus repairs) unrealistic in a HOT market?
I have a property under contract in a hot area of Atlanta. I was comfortable with the $125k asking price given the impression that it was move-in ready (my plan being rent it out and ride the wave of potential appreciation as the area continues to redevelop / gentrify). However, the inspection turned up about $16k worth of repairs. The seller agreed in a contract amendment to do some of the repairs, but ultimately failed to do even half of what he agreed to (and what was done was shoddy work). And he's not willing to hold up his end of the bargain. Now, I'm left to renegotiate or walk (do I have any other options?)
Now that this appears to be more like a rehab than a turnkey, I'm not sure what price to ask for in renegotiations. I know the golden rule (or guideline, depending on who you ask) is to purchase at 70% ARV - repairs. As a buy and hold investor, I don't mind going north of that 70% figure. From what I gather though it's not prudent to go much beyond 80%.
I suggested 80% ARV - repairs to my realtor. I actually kind of figured the seller, who was motivated to begin with, would be lucky to get that from me given that he's in breach, and looking at the prospect of having to relist the property in the winter months with the legal obligation to disclose all the repairs I've uncovered. My realtor though thinks I'm being unrealistic because the current market is a hot market. Is that true? If so, what is the right compromise?
Thanks in advance,
Rob