Advice for Off-Market Lead

[Steven Tawresey]

I used to live in, and still own (albeit for 1 more week), a condo unit just outside of Metro Denver. While I was living there, I noticed a 2 story penthouse apartment that was vacant and in a state of disrepair. It has 3 balconies with amazing views of the city and the mountains. Recently, I contacted the president of our HOA about the unit and he said:

"No one has lived there for the past 10 years. The place is a pig pen inside. Lots of water damage as the place was ignored for so long.

I was looking through some old records last week, and I see that she was suing the HOA in 1995. we've spent a ton of money just trying to get our money. This gal has used all kinds of legal maneuvers to avoid paying us money, including settlements ordered by the court.

Finally last fall, she wrote the HOA a check for $80K which cleared up most of her debt. The place has been close to a sheriff's auction several times. She needs to sell it and asked us to repair the water damage so she could sell it. That work is scheduled."

Zillow has its estimate at $417,000

Tax Assessor says $377,000

Average $/sqft for a downtown condo is $450 which, using $400 since it's not "downtown," would give an ARV of $645,000.

I can't get in the condo, but can see through the patio windows that it needs a full gut and high end rebuild. My initial numbers say around $120K renovation cost (50K kitchen, 10K per bathroom, 10K flooring, 20K water damage etc.) I wouldn't get a true estimate until I could get inside.

So my questions:

1) I used public records to find the owner's address and phone number. The business address is 2 blocks from my home! How would you go about contacting this person? Phone, email, personal visit? 

2) How would you tell them you want to buy it? Would you offer a price first or let them come up with a number to start negotiations?

3) Based on the above numbers and assumptions, how much would you offer? How much would you pay? 70% rule says $331K [($645,000 x .70) - $120)]. $193,000 seems like a a lot of profit from this deal. Sure it would be great, but I would rather get the deal than insult the owner.

4) How would you go about getting a realistic ARV without access to the unit?

Thanks in advance for the advice!