Brainstorming an Offer

[Jose Sison]

Hi Everyone,

Spoke with a seller that recently inherited a condo and has fallen behind on payments.  They're paid up to January 2014 and the property is scheduled to go to auction in late July.  Here are the numbers:

Subject Property:

2 BR / 2 BA Condo, built in the 70s
Mortgage Balance:  $130k
Monthly Payment:  $964 plus a $647 monthly condo fee = $1,611
Payment in Arrears:  $5,785 to bank
Potential Upgrades:  Kitchen, 2 bathrooms, paint and carpet for roughly $25-27k
Seller's Asking Price:  $280k

I searched for similarly sized condos in the area that sold in the past 30 days and I got an average of $250k.  I worked backwards from there to include acquisition costs, sale/listing costs, repair costs and my profit and I've come to an offer of $168k (or $152k if I go with a hard money lender.)

(I also looked at other units that sold in the same building, the average was $259k, but all of them had an extra half bathroom.)

The seller is hoping to walk away with $110k so I think that if I offer $168k, he'll be greatly disappointed.

Thought about taking the subject-to route, and depending on the source, the rental market says I can rent from $1,600 - $1,850, but with my property being a little dated, I'm leaning towards the lower end of that range.  I just don't see much cash flow.

I'm hoping I can get some help/insight with coming up with a couple more offers that can be a bit more enticing.

Thanks for the help, BP!