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Missed Property #4 – REO

June 2, 2012

I put a couple of bids in on another REO. I spotted the vacant property while driving the neighborhood close to one of my other rentals. The home was in fair condition, but would  need rehab in the $5k range. I liked the large corner lot, oversized garage, and generally appeal of the home. It was in decent shape, but a frame versus a brick. I typically don’t even consider a frame house, but I liked the lot and watched a few other rentals in this neighborhood rent quickly.

 It was certainly in a working class neighborhood. C to C- type property. Rents range from 650-850 depending on bedrooms and condition. This one was a 3 bedroom, 2 bath. It had a 2 car garage that was detached at one point. It now has a build out that connects the home to the garage. This allowed for a laundry room type area to be added to the home.

The kitchen was going to need some work. This includes appliances, paint, and flooring. The bathrooms were not updated, but they looked fine. They had the old 4 inch tiles, but these look fine when they are in good shape and fit the era of the home. The hardwoods had a few spots, but were in good shape overall.

Here are the numbers on this one:

List price: $72k (Feb) reduced to $67k in April

Tax Value: $75k

ARV: $65k

Est Rent: $850

Repair Est: $5k

First offer

I offered $48k cash in Feb 2012. The bank countered at $69k on their $72k list. I countered at $50k and they just rejected the bid. This is typically how my bank offers go. They counter close or at their original bid.

Second offer

In April they lowered their list price by $5k to $67k. I put the $48k cash offer back in.  This time the bank countered at their new list of $67k. I countered that at $48k again and upped the earnest money. No – Bid rejected.

The home recently sold for $64.5k. Not sure yet if this was an owner occupant as I don’t see an investor paying this much.

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One Comment
  1. Interesting post Chuck! It’s cool how you talk about the deals that didn’t work out (this is something most investors aren’t as willing to share with the world). This kind of content can be most helpful to people who are trying to figure out the investing game for themselves.

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