Deal Analysis (Offer flat rejected). Should I change my offer?

[Christopher Boyle]

Hi everyone,

Thank you for taking a look at this analysis.  I currently own a 4-unit that is successfully cash flowing, but this is my first stab at single family home investing.  This is a 4 Bedroom, 1 Full, 2 Half-Bath house located in the Chicagoland suburbs.  My plan would be to buy, renovate, live in x5 years, sell.  Rents in the area would command about $2200, which would not allow positive cashflow, so long term rental is not an option.

Home has been listed for sale since June 2018. Interestingly, they currently have two offers on the table. One cash-offer flipper who wants to close immediately (seller can't move that fast due to personal/family considerations), and one conventional offer which is more money, but FHA and likely won't get approved due to the non-livable condition of the home.

Current Asking Price: $280,000

After Rehab Value: $305,000

Estimated Repairs: $65,000-70,000

• $15,000 Kitchen
• $5,000 Full Bath
• $2,500 Half Bath
• $2,500 Half Bath
• $15,000 Windows
• $10,000-15,000 Central AC install + ducting
• $15,000 Paint, Drywall repair, Flooring repair, Misc

Following the recommended formulas -- ($305,000 * 70%) - $70,000 = $143,500 offer price.  Well, I offered $138,000 to possibly negotiate up to that final $143,500, but was told I'm way below the other two offers, and to not even bother.

Would you apply this calculation and purchase strategy differently?  If even the local flipper is offering more than I am, than I'm assuming I'm missing something.  I had expected to come in about what they would, using this formula. 

Wondering if you all would adjust your offer and take another shot, or move on.  Thank you for your help and insight.