It’s been a while, but we just put House #18 under contract…it was the house I’ve been discussing in my “Follow the Offer” posts… (full credit to Tom Tarrant for coming up with a great name for this one!)
Last Wednesday, I mentioned that the bank had verbally accepted our final offer, after much negotiation over several weeks. I don’t know if they were having second thoughts, were having difficulty getting final approvals or if they were just playing games, but it took two days to get from verbal agreement to an actual contract (this bank was being very responsive, so I doubt that the delay was due to their being too busy).
Of course, once they got us the final contract and addendum, they “required” us to get everything signed and back to them immediately. Gotta love the double standard…but that’s just part of dealing with banks and REO properties…
Anyway, we got the docs back late Friday evening, and then found out that our amazing closing attorneys had already started pulling title and preparing for close. Even with the long holiday weekend, we expect to be able to close this one before the end of the week!
A couple of people posted comments asking about our plans and the numbers around this property. We’re currently debating whether to hold this property as a long-term rental or do a quick rehab and flip. We’ll probably do the rehab and put it on the market for a few weeks just to see if there is interest at a reasonable selling price; if not, we’d likely rent it out.
The rough numbers are as follows:
– Purchase Price: $43,500
– Rehab Costs: Between $6000-8000
– After Rehab Value (ARV): Between $65,000-90,000
– Market Rents: Between $825-975
It’s hard to determine the ARV of this property, as there aren’t too many comps in the area, and while this home didn’t get affected by last year’s flooding, this general area did — so we’re not sure if that will scare buyers off or not.
If we’re able to sell above $75K, we’ll make our minimum $15K profit (after all fixed costs); so we may put it on the market and see if we get any offers above that, and if not, we’ll rent it. From a rental perspective, if we can get at least $825/month in rent (which shouldn’t be a problem in this area), it would cash flow well.
So, as you can see, we have at least two potentially great exit strategies on this one, and we’ll likely just let the market decide which way to go…