About to make first ever offer, would appreciate opinion

[Sean Haardt]

I am a first time buy and hold investor and I've been waiting for this house to come on the market for over a month. It is a HUD home in a rural part of community that came on the market 2 days ago. I won't have too much competition, but don't want to lose the house to nickel and diming and underbidding an already good price. I just want to get in the game and the numbers suggest this is a good price even at full asking price. It is a 3 BR 1.5 bath with driveway. I won't have any problem renting it. The bank is asking 39000. It needs a new kitchen, a new bathroom, floors sanded and finished and some paint. Everything else in the house, basement, furnace, HVAC, is in good shape. Still to get it rent-ready and done right, I need to put in about 20K, probably less if I don't have any unexpected expenses (laugh now). ARV is at least 80K, probably more. The house is not open to investors for another 8 days which will be excruciatingly slow), but if it does not go to an owner-occupant, I am making an offer. Would really appreciate someone willing to look over my numbers before I blow it. Although I would prefer to get a commercial loan to BRRRR it in order to save up my fannie/freddies, the numbers don't seem to cash flow if I BRRRR it, but maybe I'm doing something wrong. I ran the numbers on a 15, 20 and 30 year fixed being pretty conservative using BP rental calculator. I'm willing to give up a little ROI to get in the game. Thanks for any advice you could offer. The numbers on a 15 year fixed are:

Monthly Income: $825.00	Monthly Expenses: $615.89	Monthly Cashflow: $209.11	Pro Forma Cap Rate: 6.16%
NOI: $5,232.00	Total Cash Needed: $35,300.00	Cash on Cash ROI: 7.11%	Purchase Cap Rate: 13.42%

Down Payment:	$7,800.00
Loan Amount:	$31,200.00
Loan Points:	$0.00
Loan Fees:	$500.00
Amortized Over:	15 years
Loan Interest Rate:	3.750%
Monthly P&I:	$226.89

Income-Expense Ratio (2% Rule):

1.25%

Total Initial Equity:
$53,800.00

Typical Cap Rate:
9.00%

Gross Rent Multiplier:
3.94

Debt Coverage Ratio:
1.92

ARV based on Cap Rate:
$58,133.33

Thanks for any advice you could offer. 

Sean

[Curtis Harvey]

@Sean Haardt Here is how I look at it. If it cash flows, appreciates well, and I can get it below market value, that is a great start. If you purchase it for 39k and the ARV is 80k, then you can get a cash out refi as soon as all of the repairs are done and you have the place rented out. You would be able to get between 75-90% of the ARV depending on the lender. I like the 15 year loan payoff, because at that point it is all income. Just my 2 cents.