Figuring out what to offer

[Bin Chen]

Hi all

I am interested in putting an offer on a property. The house is a 2 family house. looking at comparable houses in the area it should be worth 850k after repairs.

The problem is the interior of the house is a nightmare. I had my contractor that I work with regularly take a look at it and he's saying its a gut job which will cost 220k. There were a lot of illegal modifications done in the house and would require several inspections and scheduling with the coned to add meters takes a long time. He estimated 6 months worth of work.

Since this house is in such bad shape we will not be able to get a conventional loan for it so it will need to be a cash offer.  I do not think there will be much competition. The asking price is 700k but there is no way I would offer that. I am trying to figure out what would be a good price to offer since I will have a lot of cash tied up in this deal and it will take a long time, I am also wondering if I should offer right away or wait for this house to sit on the market longer. 

Thank you in advance

[Brian Adzadi]

@Bin Chen

If your potential property is in the city of New York, then you are in for stiff competition. In NYC right now its not about the house itself, its the land the house sits on. 

On most properties I have seen in Brooklyn, investors tear down one to two family houses and build 4-6 story tall residential condos or apartments. So whatever they pay for the property, be it 500k to 1 million, does not matter to them because the amount they could sell each unit of the building as a condo or charge for rent as an apartment will pay itself over within 1 to 2 years. 

So at the end of day, what I am saying is if this property is in NYC, be prepared to pay for asking price or even more.