Post inspection counter offer when using an FHA or 203K?

[Chad Mitchell]

Hi,

I have a 4 plex under contract and just finished the inspection, which showed a number of things that need to be fixed per FHA requirements (e.g. electrical wiring, new roof, peeling paint, etc.). Current asking price is 192K. One of the units is vacant, which I plan on moving in to. The others bring in 1600 per month (2245 if all rented). After rehab, the total income will be about 2850 - 3000.

The house is old (1899), and definitely needs a lot of work. What are potential game plans for next steps?

My thinking is: (1) Make a counter and ask the owner to make all the needed repairs (rough estimate = 20K - 25K). Or, (2) Current asking price minus cost of repairs, and we'll use a 203K to cover the cost of the repairs.

Is there an alternative? Is this possible? What would you do in this situation?