Negotiating our 1st deal - Counter Offer Advice Needed

[Rebecca Bauer]

We are downsizing our home to increase our buying power (and simplify life a bit).  We will be living in this property (3 bed, 1 bath, 1100 sqft) but have decided that whatever property we purchase will have the ability to cash flow if we need to live in a different property in the future. We are not attached to this house emotionally. So even though we are looking at it to live in we are evaluating it as a rental property. 

MY QUESTIONS - Fannie mae has asked for our highest and best by May 2nd, is there a strategy to win in this type of negotiation? What is a reasonable highest and best offer in this situation if we still want a decent ROI and Cash flow?

The Specs:

Fannie Mae Homepath Property  - First look expires May 2. 

Currently not livable because HVAC and plumbing are not in working order. 

59,900 List Price

90,000 Realtor Provided ARV

37,500 our cash offer (no lending because it's not liveable)

40-45k - Repair estimate (roof+double layer removal, foundation and sump pump, asbestos siding removal/replacement, HVAC replacement including about 40% of ductwork, electrical panel replacement, plumbing updated from cast iron, complete kitchen and bath, chimney removal, 1100 sq ft flooring, all interior doors and hardware, single garage door, windows and 5 exterior doors, yard drainage issues and tree removal, drywall repair and other finishes, possible mold remediation)

$345 Expenses (excluding mortgage) 

$950 Monthly Rent