I just started reading Dean's book BAREM last week. Bursting with excitement, I have already found an REO 2 minutes from my house without totally completing the book.
I want to make an offer. The problem is that I don't know if I will have enough money for the repairs/minor remodeling. The house was built in 1978, 2500+ sq ft, sold for $200,000 in 2006, began as an REO at $169,000, DOM - 163, and now is listed for $139,500. The area it is in is a well established neighborhood and the homes are well above this asking price range. I know this is a Great investment.
The house is structurally sound but there is a large in ground pool that needs a new liner and possibly more. I realize I need to get someone to give me an estimate on this repair. I know it will be a bare minimum of $2K. In all, I would feel comfortable with a total of $15K for updates, etc.
The bank has an "AS IS" addendum so I did not know if I could request an offer such as:
I will pay the full $139,500 (I think is a good start) minus 3% closing costs, and X amount of $ for repairs... preferably $15K. I am concerned that this is too much because my realtor was told by the bank's agent that someone had just requested to do a home inspection, in preparation for making an offer. I do not want to offer too low! The electricity was supposed to be turned on, specifically for this other person requesting the inspection, however, when we toured it tonight, it was not on. This makes me question the validity of there even being another interested person.
I really want the house. I know the value of this area but I need the money for repairs and updates. This is the true issue. This is the reason I asked if it were possible to get a second mortgage from the bank with the REO? (Just some creative thinking)
The reason this is an issue is because I may want to move into this house and rent the one I currently own so I can't benefit initially from the profit. I can get 97% financing if I occupy it and only 90% as an investment property. This is due to the recent changes Nationwide. I can get up to a $19K loan on my 401K but if I am going to live in the house I will have to have the repayment taken from my paycheck. Can I find another way to live in the house and not have to flip it? If anyone has any suggestions, please help.
High Point, NC