I Made an Offer on a House Today....Anyone Want to Critique?

[Brandon Foken]

I went and saw a house in Oakland, CA today. I had found this lead via my direct mail campaign (absentee owners). The gentleman I was dealing with had inherited this house from his aunt about 3 1/2 to 4 years ago. It has been vacant the entire time and suffered damage from a fire that was started on the driveway by a disgruntled family member. In addition, he was doing a little cleanup work around the house to try and keep away the riff-raff that knows the house is vacant. In addition, I've also uploaded the pictures I took and they can be found here.

My exit strategy is to either a) wholesale or b) partner on a flip. A lot of rentals are in this area so more than likely I would end up wholesaling to a long-term investor. I’m not at the point in my investing career where I’m looking to acquire long-term holds.

Okay, now let’s take a look at my numbers:

ARV - $300k – 310k
Repairs - $80,000 (roughly – I need a lot more experience in this regard)
Fixed Costs - $40,000 (trying to be ultra-conservative)
Profit - $25,000 ($5,000 for me; $20,000 for flipper)
Offer - $157,500

He said he wanted to think over that offer as it was less than he was hoping for ($175k). It also didn't help that two people stopped by while we were outside asking if he was looking to sell. He told me he’d give me a call in a day or so to let me know what he is going to do. Finally, I asked about the possibility of seller financing since the house is free and clear but that was quickly shot down due to the man’s wife being a banker at Wells Fargo – she just doesn’t want to be a lender.

What does the BP community think? Was my offer solid? Would you have gone lower? Or higher even? Any feedback/advice is greatly appreciated.