I just made my first offer on a house

[David Miller]

I'm taking the plunge. Other offers can still come in for the next 48 hours, and so that makes me nervous. I had literally just spoken to my realtor and finance guys yesterday. Today, the realtor lit up my inbox, and by the afternoon they both had me back on conference call telling me to jump on this house. As I was leaving with the realtor this evening another family pulled in to see it. I live in a hot market. I've known this, but it was a visceral reminder that other people also want to buy this house.

The house is a foreclosure. I'm trying to get it on a 203k. We made an offer high enough that the closing costs should be all but covered by the seller, and that it should be competitive even in a hot market.

It's happening fast. My head is spinning. My offer is probably closer to 78% of ARV, but I also plan to hold this house for a long time. I eventually want it to become a rental, but I will need to live there for probably a year or two until I'm able to buy another home. How can I understand the profitability of a deal like this, or is this just something that I'm not going to know until it all shakes out? I can't have a proper inspection or renovation appraisal until they accept my offer. My best guess walking around was that it needed some fairly moderate repairs. The kitchen is a total renovation. The bathrooms might need it too. All of the floors need redoing. The porch needs to be braced. Paint for everything... etc. The HVAC looks old but it apparently works. HUD did an inspection, but not really.

The highs are that this home is in a neighborhood where the median value is closer to 200,000. It has a decent lot. It also has a fireplace and a nice porch. Conservatively, the realtor and I guess ARV to be 160,000, but I honestly believe it's probably more.

Newbie question time, I guess..

With my offer on the table, will I still be able to negotiate it pending inspections and construction estimates? I don't know if 203k allows it.

For more experienced investors, how do you manage in hotly contested markets? Do your offers go up compared against the 70% rule? 

Going in with practically no down payment, what is the best way for me to gauge how profitable my investment will be?

Regarding the timeline I can expect, the realtor said I should know if my offer has been accepted in 48 hours. I think she is referring to the end of the exclusive period, when my little HUD house would go out to non owner occupants. My lender is very experienced with 203k, so I tend to trust when he says 45 days for closing. This basically means that I cannot start renovations until after closing, so am I looking at late May? I've seen others' horror stories regarding this time frame and it gives me cause for concern.

I'm certain these questions have been answered already somewhere, so I apologize if I'm kicking a dead horse.

Well, that's all I've got. I appreciate any insight, and I'll post back with the results. Fingers crossed!