Am I being too conservative? Would you walk this BRRR deal?

[Matt Hudson]

I made an offer on a home and we were just informed they have a higher offer. Below is an overview of the details. Should I raise my offer?

Listed at $100k. The home is on a sketchy street but every street around it is turning around. This makes pulling comps very difficult. Average comps in the market are between $85-90/sqft. However, in this area some houses are selling for much less as investors buy them an flip it. In an effort to be conservative and to not get blindsided by a low appraisal I used the low average of $65/sqft to calculate an estimated ARV.

OFFER #1:

Offer: $62,500

Repairs: $14k

All in: $78,600 (with closing costs)

ARV: $98,280 ($65/sqft x 1512 sqft)

Refi (80% LTV): $78,624

Below is the potential counter. $70k max offer and lowered the reno cost. The above had a cushion in case of unexpected repairs. I also raise the cost/sqft to $70 which is now a medium-low price/sqft in the area.

POTENTIAL COUNTER:

Offer: $70,000

Repairs: $10k

All in: $84,100 (with closing costs)

ARV: $105,840 ($70/sqft x 1512 sqft)

Refi (80% LTV): $84,672