Yesterday I put an offer on a SFH (3/2, 1400 sqft) and I'm curious as to how others here would analyze the situation.
Market value: ~$88K after fixing
Cost to fix: ~$7-10K (depends on how much work I do myself)
Anticipated rent: ~$800 (maybe 850, but I'm being conservative. Zillow says 950, but most landlords around here have a high eviction rate and I take the approach that I'd rather lower my rent and insist on good credit)
Taxes: $970/yr
Insurance: ~$700/yr
Legal fees to buy: $1K
List price: $66K
I offered $50K cash. That means it doesn't meet the 2% rule. However, I would eventually sell the house, and considered as a flip, I've seen the formula that you should try for (after repair value - repair cost) * .7. For this property, that would be 88-10=78*.7=$54.6K
Honestly I'd be surprised if they take my offer, but I'm wondering if I should go up a little if they counter. The calculation that I've done in the past is to try for at least 10% ROI, taking into account typical repairs and vacancy. This one meets that at 50K, but not at 55K.
Thoughts?