Hi BP! I came across an SFR foreclosure that I am seriously considering flipping and wanted to get some much appreciated feedback on my first analysis from any of the more seasoned folks out there.
Well, here it is: This is a 4/2.5/2, 2753 sq ft. foreclosure that was built in 2006 located in an upper middle-class community with an excellent school district. Sale history shows the house was on the market from 6/2015 to 1/2016. The asking prices changed monthly. With the exception of the 9/2015 asking price of 195k, the sales price was consistently over market (207k – 227k). I would guess the owner was upside down, getting notices and frantic to get what was owed in order to pay the bank before foreclosure. No obvious external or internal cosmetic deficits from pictures.
Asking price= minimum bid 50k (as of 2/2016). Maximum offer= $102,400(ARV of $204k x 0.6 = 122,400 – estimated rehab of 20,000) NOTE: 70% of ARV only yielded 15.5K profit
HML pays 90% of PP = $92,160
10% Down payment $10,240 (Considering the equity as the down payment?)
Purchase Closing Costs= $10,785
3.5 HML points/fee $3500 +Attorney fees $300 +Inspection $125 +Title search fee $200+ Title insurance $250 +escrow $5810 (monthly insurance is $114 x2 months and back taxes of $4980 from 1/2014 through 2/2016) +Recording fees 200 +Appraisal 400
Holding costs for 90 days= $35,664
$1,587: Taxes ($4,980 per yr)/Ins ($1,368 per yr.) = 529 x3 months (March, April, May)
$3456: Interest only HML payments ($92,160 @ 15% / 12 = 1152) X 3 months
$ 1137 Dumpster fees x 1 month (10 yard dumpster @ $379 flat rate per 10 days)
$ 3500 staging fees x2 months
$20000 Rehab (extremely conservative estimate, actual cost pending)
$5000 Possible Repairs (extremely conservative estimate, actual cost pending inspector report)
$300 City Water, trash, sewer (@100/mo)
$900 Electric ($300/mo)
$84 HOA (@$28/mo)
$300 Lawn mowing ($100/mo)
Selling Closing Costs and expenses = $19,380
$ 7140 (3.5% of ARV)
$ 12,240 (6% agent fee)
Total Profit = 204,000 – 169,217 = $34,783 (before taxes)
