I made my second offer the other day. The house is a 3/2 ranch in a suburb of Atlanta, built in 1970. I first saw the house last Friday, the first day it came on the MLS, and I was pretty sure that — being a good deal — it would probably go quickly. Knowing it was a bank REO (which is the last stage of foreclosure), I knew that no offers would be considered over the weekend, so I had until yesterday to put in an offer.
The house is in relatively good shape. It needs some gutter work and plenty of landscaping on the outside. On the inside, it needs all new flooring, a new kitchen, two bathrooms need to be remodeled, an extra room that used to be a garage needs some work (the wood paneling needs to be removed and replaced with sheet-rock, etc), and the “laundry room” needs to actually support the ability to do laundry.
That’s the extent of the rehab should I decide to rent the house. Should I decide to turn it around for quick resale, I’d want to knock out a couple walls, put some higher-end flooring and fixtures in, and add some upscale features. I haven’t yet decided what my exit strategy will be on this one, but I think I have multiple options (rent or sell).
So, knowing I needed to put an offer together quickly, on Sunday I had one of the General Contractors I found come out to the house to give me an estimate on what it would cost to do the rehab. We focused on the rental rehab, and within an hour, he was able to give me a ballpark estimate for what it would cost to do the job. With that number in hand I was able to figure out what my maximum offer price could be to purchase, rehab, and still generate decent cash flow.
First thing Monday, I met with the agent who pointed me to the property, and put in an offer for a few thousand less than my maximum. I expect to hear back on my offer later this week, and have a feeling that — assuming the bank received multiple offers — I’ll be asked for my best and final bid. I haven’t decided yet what that will be, but based on the numbers, I think this property is likely a great deal even at list price.
I’ll have more to say once I hear back on my offer, and if things go well, I’ll go into more details on the property and the numbers…