submit an offer on a REO, part 2 - Done & Rented.
Offer was summited 03/04/08, Closing was 05/03/08 (took 60days for title work).
purchase price 30k less 1k in tax credit, remodeling took 5 weeks, remodel budget was 12k, but it was over run, had to replace furnace, and a new well, which was not in my estimation.
the house was a 2 bedroom, I repartition it to a 3 bedroom, replace most of drywall, all new entry doors, all new paint, new floor covering, new bedroom fixture, total cost 21k.
lease signed today, rent is 725 per month, tenant is a hospital X-rate technician, 2 small children, income 38k a year, good referents.
total project cost is 29k closing plus 21k remodel, total 51k, market value 98k, next step is cash refi for 70% LTV at 68k, this will be a challenge due market condition, in the past, cash out refi requires 6 month seasoning, but no one knows what will happen next 6 month.
Original post on 3/4/08
got a call from a realtor today about major reduction on a 2 bedroom cottage with lake easement, this realtor specialize in REO and HUD, I usually get the listing before it hit the market.
this property is a 2 bedroom cottage converted house, detached 2 car garage build in 1999, new well, new septic, some new windows.
Tax access value at 96k, bank foreclosured sherriff sale is 98k, bank own on the market 119 days, first reduce to 72k, then 54k, today is 35k, submit offer at 29k, exit if over 32k.
it will take some drywall repair, plumbing and heating, painting, carpet, about 12k.
I estimate market value at 90k, will cash out refi at 70% is 54k, less repair and downpayment total 42k, profit 12k for my time.
Rent expect to be at $650, mortgage payment$360, insurance 40, tax 40, possible cash flow $200 per month.