your thoughts on this REO please?

[Gary Dayton]

Hello everyone and Happy New Year!

Any thoughts on the below would be greatly appreciated:

2 bed/2 bath w/ garage on .089 acres. On for $249,900K reduced $14,000 since April 07.

I'm looking at:

Zero down loan at 5.75 ish (not locked in) They will pay about $300-$500/mo towards rehab.

Plan A:1-2 year rehab plan...owner occupant situation.

Plan B: If market tanks, rental for about $1100-$1200/mo. Absentee owner-occupant allows a a family member to live in it.

Comps in the area range from $250K-$285K

It needs basic cosmetics (some gutter repair, kitchen appliances, new paint, carpet in a couple of rooms). My father can do or coordinate all the repairs himself.

There is an HOA fee of $64/Mo for a pool and clubhouse.

I'm looking at

68% * $249,900 (low end FMV) - $10,000 repairs = $159,932
70% * $249,900 (low end FMV) - $10,000 repairs = $164,930

Although my agent might think it is too low (she tried to get me to go in w/ $180K but I stuck to my guns :protest: ) , I'm going with everyone's advice on here.

I am starting my offer at $156,475 and will work up to $165,000 max.

My realtor is having me get a Pre Approval for $157,000 (already have one for $200,000) and a $2000 Good Faith check to strengthen the offer.

Using Wheatie's spreadsheet he used for another person ( I hope that is ok :lol: ), I came up with this:

2 year Rehab worst case
$165,000 Purchase Price
$3300 2.00% Purchase Closing costs
$19,200 5.75% Interest
$4,200 Holding costs (24 Months of mortgage principal payments, right?)
$10,000 Rehab costs
$19,992 8.00% Sell closing costs
$221,692 ($165,000 + $56692) Total costs
$249,900 Sell price
$28,208 Profit

2 year Rehab best case
$156,475 Purchase Price
$3129 2.00% Purchase Closing costs
$18,000 5.75% Interest
$3960 Holding costs (24 Months of mortgage principal payments, right?)
$10,000 Rehab costs
$12,518 8.00% Sell closing costs
$204,482 (156,475 + $47,607) Total costs
$249,900 Sell price
$45,418 profit

I think my repairs are a bit conservative, but both scenarios show a little room without too much profit loss (I hope) I'd like to hear what you guys think.

Thanks for lookin'!
Gary

EDIT: Added numbers and corrected grammaticals.