Your thoughts please

[David Albertson]

I found an REO that's been on the market 255 days. The original price was $75,500. They currently have it listed for $46,500. The county has it appraised at $79,100. It mainly needs cleaned, painted, bushes trimmed, etc. The only thing that makes me hesitate is one of the bedrooms has had the sheetrock removed from the ceiling, and the carpet was removed from that room and the room next to it. But, we can't find any evidence of water leaking from the roof. WTF? Plus the roof looks like it's less than 5 years old. I'm going back over there tomorrow to take a closer look. Anyhow, here's the numbers.

Projected monthly rent - $675 (I thought $650, realtor and rentometer say $700, so $675)

$675/2 = $337.50
$337.50 - $100 cashflow = $237.50
$35,700 @ 7% for 30yrs = $237.51
$3500 estimated closing costs (probably high)
$1000 estimated repairs (I'll do it myself)
$35,700 - $4500 = $31,200 (the max I should pay, right?)

How much do I make the first offer for? I was thinking $25,000 but that doesn't leave me a whole bunch of room to negotiate. What do you all think?