Expert: Jessica Bryan - 2/7/2008

Question
My name is Chris and I recently posted on here a few weeks ago looking for some help with some properties. After looking at the homes and finding the one that fits my goal, I have come across some more questions:

Here is the current Information: 3 bed; 2 bath; Duplex asking 23K; appraised at 43K; 1400sq. ft. Roof is 7 years old (still looks new); Duplex currently is rented-Upstairs (single bath & single room @ 375/month utilities payed by tenant who is occasionally late during the winter due to seasonal work but always catches up, who has been there 10 years. Downstairs-family that has been there 1.5 years, pays 400/month & never been late. Current lease is month to month. House has been on market for 6 months. Not under foreclosure. Ugly looking home in newer neighborhood (only 2 homes on block are in need of repair and one is in the process). Needs all new siding, flooring (carpet, vynal...etc) walls need paint and patching. Basement is dry and strong in terms of support beams & such. Furnace is from the 50's/60's) There is asbestos a single heat pipe and im not sure if I should get an inspection before or after I buy it, or use the inspection contigent on the offer.  I have comps of last 6 months sales in Antigo, WI. Taxes are 1.1K. I have no income or assets (besides my car which isnt payed off) I am a college student, and would manage the property myself.

My goal here is to bring monthly cash flow into my pocket and to let the equity build up in the home. I need help drawing up a deal so that I do not low ball the offer. I listed things that the house needs above. I would like to offer seller financing; if that falls through my grandma would co-sign; she has good credit as she is in the real estate business and I have a rating of 712. Any ideas? Thanks for your time and help!
Chris Jesse  

Answer
Dear Chris;
If you are handy and can do some of the work yourself this sounds like it might be a good deal for you.  The problem I see is that you said you don't have any income or assets.  How will you pay off the loan?  Why would the Seller finance to someone without a job?  You must have left something out because someone who has no income or resources can't afford to buy anything.  Who will make the monthly payments?  If your grandmother is in real estate she can explain some of the process to you but basically making an offer should always be subject to and contingent upon inspection.  You don't want to buy something and then find that there are some very expensive problems that require your immediate attention.

If you resolve the financial part of this, my suggestion is to research the percentage that homes sell for off of their asking price.  Let's say that they sell for 5 percent lower than asking price...then your offer should be constructed at about 10 percent lower and you then can meet in the middle.  Every area has its own numbers.  Where I live,, offering 10 percent would be about the lowest one would go and not offend the seller to the point that negotiation would stop.  Check comps with a real estate agent who works that area and see if you can structure something that makes sense.  

Good luck,
Jessica Bryan