Posted by Baltimore BirdDog on January 29, 1999 at 14:40:20:
Time has a way of changing things. The roof may start to leak. The boiler may go bust. The bank’s REO personnel may be ordered to dump it by their higher ups. By all means, continue to submit your offer to the bank every month or so. This costs you nothing and you may be surprised at the results. Personally, though, I’d make a few changes to the offer:
Treat this as the fixer-upper that it is. You need enough cash or potential equity NOW to fix the roof, the boiler and take a sledgehammer to that illegal addition (low interest rates are no good if the place is vacant and falling apart). Either the bank can give you a new loan based on the after-repaired value of the property and your handyman does the repairs OR the bank agrees to a price low enough, defined as:
FMV After Repairs
- Rehab Profit
- Rehab Costs (repairs, carrying costs, selling expense, etc.)
- Your Flip Profit (at least $5,000)
for you to flip it to a rehabber and make some profit.
I’d also check the comps again. Someone posted, correctly, that the range is too wide, both for FMV price and rents. Of course, unless you plan on holding it after you rehab it, you’ll only be concerned about the price.
Next time you’re in the bookstore, sneak a peek at the back of Kevin Myers’ “Buy it, Fix it, Profit.” Therein lies a success story of a guy in your exact situation who picked up a bank REO at a ridiculously low price just by instructing his agent to continue submitting his original offer. Once you’re finished reading, if you’re at all interested in learning how the rehab process works, buy the book. It’s an excellent reference.
Good luck and don’t give up!