Tips or tricks for evaluating foreclosed flip for a n00b?

[Allie J.]

Hey all! 

I am new to BP and considering my first RE investment in Durango CO. I thought I'd throw something out there and see if anyone cared to offer an opinion. 

I am curious for any pointers on how to evaluate a foreclosed home for a "live and flip."

I have found a foreclosed townhome in a small community (4 townhomes) about 15 minute drive outside of the small town of Durango. It needs major, major attention. There is mouse poop in the refrigerator, holes in the walls, some of the outside wood paneling is covered with a sheet of plywood (maybe it used to be a door? Maybe someone drove a car through it? don't know). It's got a nice, big detached garage. 

It is going for 129k. It is "2" bed and 1 bath, although the second bedroom is a bit of a joke - it's actually a really big closet. It's 940 ft^2. I think it would need 15-20k - provided no major/unanticipated issues come up.

One of the other townhomes is for sale. It's about twice the size, three bedrooms 2 bath, and they are asking 309 (dropped from 320). This one is by no means in great shape, but not bad.

How would you guys go about evaluating the potential of this home? If the nicer one sells for 300k, and I could get the foreclosed one into equal or better shape, would... 200k be a reasonable estimated sell price? 180K? Surely half the square footage doesn't equal half the price??

Any guidance for home evaluation would be much appreciated. Thanks BP!

Allie