First FLIP - Looking for advice to run in or run away

[Mark Ondov]

     First off, thanks for taking the time to lend me your wisdom. I believe I have found what should be a pretty good FLIP deal. I would like to go ahead with this, but am a bit nervous due to the nature of the buy.

• House:
  
  • 3/2, 1700 sqft; 20 yr old. Lot value assessed at just under 15K.
  • Foreclosed on in 2011; appears to have been vacant since.
  • Never appeared on MLS list.
  • ARV: 160-180K. Dependent on rehab.
  • Neighborhood turns over like flapjacks at IHOP. Majority of the neighborhood lists in either a 160-170K or 180-190K bucket; dependent on finish materials and size.
  • I am hoping to get the house from the bank at 50K. The loan on it was for 185K, but hasn't been paid on since 2011. Title company tells me it appears to have just never made it to the bank's resale department due to the backlog caused by the bubble crash.
  • My purchase/resale costs, financing, rehab and holding costs look like they should total to under 70K.

• Rehab Plans:
  
  • New roof, replace ceiling insulation, new carpet and/or flooring for entire house, update kitchen, paint, add some trim in a couple of places, new fixtures throughout, new fence around backyard and redo landscaping.
  • Looking at 50K unless mold forces me to gut the drywall. From looking in the windows, I don't foresee this as necessary, but I'm just not sure. --> I have no idea how much general mold mitigation costs? Anyone have some advice here so I can look at wost-case numbers?

• Biggest Worries:
  • Since it is bank owned, I have not been able to get a look at the inside. Assuming I will have to buy 'as is' and 'sight unseen'. Is this correct with a bank-owned property?
  • Vacant since 2011. Roof is in poor shape. Likely moisture and/or rain has been getting through.
  • Mold: General climate in the area is dry, but we get enough major rain showers in the spring and fall that any exterior holes likely allowed water to get inside.
  • Bank offer: Do you think I can actually get the house with an offer at 50K. I am actually looking to offer 40K, but I'm afraid that might get further requests ignored. Bank is losing $1,500 on taxes alone each year. 
• Basic Numbers:
  • Buy - 50K
  • ARV - 170K
  • Holding, financing, rehab - 70K
  • Total expected costs to me - 120K
  • 75% of ARV - 127.5K

Thanks again for taking the time to give me some advice!

Mark