How Far off in my Thinking am I? :)

[Jay Oliver]

What an interesting, informative and exciting site! I have been lurking and learning here for weeks now. Thank you to all of you who share your expertise, experience and wisdom.

I have been actively looking for my first investment property - single family home - and am having a hard time finding anything in my area that is far enough under market value to produce $100 after OE.

My plan is to buy and hold and most of what I find looks like the figures below, which is actually an REO I am going to make an offer on on Monday:

3/1 and 984 SF
Listed for 77,900
Estimate Appraisal: 93,500 - 114,000
Sold in 2006 for $110,000 - but that was during the boom...
Will Offer: 69,000
Bank Loan: 80%
Down Payment: 20% - best my area offers
Taxes: 1693.00
Insurance: 1,100
Repairs: approx 6,000
Will probably rent for about $750 - rents not = to the 1% rule in Ocala.

After I figure the taxes, insurance, 5% vacancy rate, 8% of income for maintenance (don't really know how to account for this as I'm a newbie), $210 electricity/water holding costs till rented per year, $200 for advertising to rent it per year, my OE are at 48% of my operating income . 8,400 - 3855 = 4,209.

I will have 4,209 left to pay P & I, and I will be negative a couple hundred dollars the first year. (After taxes and depreciation I will be + 300 or so). At this rate, it will take me 7 or 10 years to make $100.00 per door at 4% appreciation and debt reduction...

I figure the numbers mean my original offer is too high and I need to offer less. However, I've read that banks don't usually go below 10 to 15% of Market Value (or is it listing price?) on REOs.

I'm so new that I figure I'm leaving something out or just going at it the wrong way. I certainly don't expect to get rich quick off of real estate - but do want to begin making smart investments that, down the road, are going to allow me to retire VERY well... :D

Any input would be greatly appreciated.