Rehab analysis, Denver

[Samuel Hall]

Hey folks, I am practicing my deal analysis and want some feedback. Are my methods sound, am I missing any information?

I went to the Denver foreclosure listing and picked a random property: 1592 SOUTH KRAMERIA STREET

$23,118.04 is owed on the property. I have an ARV of $374,507. The ARV was calculated using a house that was sold in the neighborhood I calculated price per sq foot on the comp and applied that to my subject property.

Knowing nothing about the property, I estimated 50K for repairs. I understand that this number can fluctuate wildly.

Taxes were pulled from public records. Insurance was calculated using this equation $6/$1,000 of ARV + $500 if unoccupied. I estimated 6 months holding time.

I estimated 200K as a purchase price which is 53.4% of ARV

Any other information is estimated. I can elaborate further on the numbers if necessary.

Thank you for your input!

After Repair Value $374,507

Purchase Price $200,000

Estimated Repair Costs $50,000

Total Financing Costs $0

Total Holding Costs $3,266

Total Buying Transaction Costs $1,900

Total Selling Transaction Costs $9,149

Total Annualized Cash on Cash Return 83.38%

Purchase + Rehab Return on Investment (ROI) 44.08%

Sources of information:0

https://www.denvergov.org/eforeclosures/QuickSearch/Details/72934?sname=OriginalNoteAmount&sorder=asc&page=1&rNum=20

http://www.zillow.com/homedetails/1509-S-Krameria-St-Denver-CO-80224/13408492_zpid/

[Bill Hamilton]

The odds are extremely high that the mortgage going into foreclosure is a second mortgage rather than a first. If you are seriously looking at this property you need to have a local title company run an E&O report. Otherwise you could end up buying out a house on which there is still $400k in outstanding liens.

Think about it logically in the Denver market, anything worth that much in ARV and only owing that little, could be listed on the MLS and sold in a few days to a cash buyer.