Home under contract listed as 3 bedroom but is missing a closet

[Larry Johnson]

Hello everyone! I recently got my first investment property under contract and is in the last day of my 10 day due diligence period. While looking at inspector report, I noticed that 1 of the bedrooms does not have a closet. I'm unsure if this is a deal breaker or not. The home was listed as a 3 bedroom-1 bath and I was able to negotiate for 23k. There's numerous issues; hole in floor and hole in wall, outdated kitchen, ceiling tile is coming off in portions, metal roof that screws need to be replaced etc... I received COMPs from the realtor and the market value ranges from 80-123k. My proposed strategy is to use the BRRRR method with a budget of 25k. After reviewing the report I am a little nervous because I am wondering if the budget I have is realistic and lastly, if the needed closet should be considered a deal breaker. I talked to my realtor about it and she stated she was not aware of the closet missing. The seller is unwilling to go down on price. Unsure if I should walk away or not. Like stated earlier, this is my first deal and I don't want to make foolish mistakes. Can someone please provide insight. Thanks in advance!

[Peter Sanchez]

Originally posted by @Larry Johnson:

The home was listed as a 3 bedroom-1 bath and I was able to negotiate for 23k. There's numerous issues; hole in floor and hole in wall, outdated kitchen, ceiling tile is coming off in portions, metal roof that screws need to be replaced etc... I received COMPs from the realtor and the market value ranges from 80-123k. My proposed strategy is to use the BRRRR method with a budget of 25k. *** The seller is unwilling to go down on price. Unsure if I should walk away or not. Like stated earlier, this is my first deal and I don't want to make foolish mistakes. Can someone please provide insight. Thanks in advance!

 Is the closet the only issue?  

1) at $23k there isn't a lot of room to negotiate down especially since there are closing costs and the seller has to move, so I'm not surprised they won't go down. 

2) from the description it sounds like it needs a lot of work and adding a closet (literally just some studs, drywall and a door) is not going to cost much if you do it while you are tearing up, replacing and fixing up everything else.

Are you sure the issue isn't just that it's your first and you are getting nervous?  If so, go over your comps again and your repair estimates and get comfortable with it.  Even if your wrong it's easier to recover from a $50k (Im including repairs) mistake than a $200 or $300k mistake. And if you go over the comps and you still think the numbers look good, then find a way to power through it and you will have one under your belt and will be more confident and competent in your next one.