First-Timer: Seller is being difficult, hard to est house work.

[Jade Ferra]

First I would like to say hello to everyone, I have read so many of your stories and listened to quite a few amazing experiences. I am amazed what so many of you have been able to accomplish and BP has been a huge reference for me in getting into real estate and I am seriously looking at buying a house as an investment. The market is difficult for me to price (house worth AND rental costs), but there are a ton of renters and not many rentals, it's really slim-pickings. The area is also not very financially well-off though, so I feel like it has a low ceiling even though there is so much demand (no vacancy).

I'm in coastal Oregon. I am having trouble pricing a home I like. The plan is to live in it for a year, fix it during that time, then rent it. It has easy potential to be a duplex. The top is a more high-end setup that it will catch, but the kitchen is new/done. It's very large, has a deck with a view and the 2 levels have separate parking areas, there's also a backyard. My dad is a contractor and we'll be doing most of the work together to minimize costs. Currently the bottom floor is a 'living room' connected to a master bed/bath and a large unfinished basement for the other half (we want to blow that out and give it a kitchen and everything, may be able to give a second room too).

So I offered $210k + seller $5k towards my closing/prepaids. He rejected it. His agent verbally countered my agent with 'it's already low, but he'd probably entertain $215k or $225k + closing/prepaids.' It's important for me to get closings, I have a good job, but I'm young and I only just finished my emergency, paying down my student loans, etc. I rather have as much money at the start as possible to fix it up.

I have a USDA 3.25% interest loan approval. At 210 the monthly for all the house fees (insurance and others are estimates) was $1280/mo, 225 it's $1335/mo. Not a huge difference. I'm a little miffed by how rude he was, not even counter-offering, it's not like I was low-balling. My realtor said she honestly thought the place was worth $200k, but the seller is only somewhat motivated and he is now saying he'll just rent it if he can't get a buyer. She said because of it's location it could rent for $1500-$1800/mo (current state as 2 story 3 bedroom), and rentals are super scarce in that area. However, it's not a wealthy location. Usually 3 bedrooms go for $1200-$1400/mo, but there's only ever 6 rentals available in the area at a time so it's hard to see how high the 'high-end' renters go (because it is a huge house). It's also in an excellent area.

If the top is a high-end 2/1 and the bottom is a normal 1/1 or even 2/1 it could bring in $2200-$2800/mo based on some rough pricier calculations... 

How do you guys figure out rental prices in an area where rentals are immediately gone (nothing to compare)? But for a high-end type rental? And should I do the 225k? I'm pretty sure there are some actual repairs and I'm worried I'll waste the money inspecting it then he wont come down in price at all even with the needed repairs. 

Specifically the gutters need to be replaced and there may be some rot around them, other than that there are no needed repairs (we think). However, the carpet in the bedrooms needs to be replaced, the wood in the living rooms needs refinishing, so does the deck, the outside of the house needs repainting, and the property needs a fence (we have dogs and it has no fence). These aren't very expensive, but if the gutter thing is $10k, that's kind of big deal, especially considering 225 is already at the high end of the range of worth...

Thank you all very much to any advice. I do personally really like the home, I think we will turn around and be able to sell it (worst case scenario) for significantly more than we paid for it when all the improvements are done, but it's a hard market for a first-timer like myself to estimate and there are so many moving parts....