Is it good Deal? Foreclosure Auction - Posted by Ed(NY)

Posted by Ed(NY) on November 30, 2004 at 09:33:50:

I don’t know what was the sales cost but eviction cost were not $10,000. I am not sure how much were it exactly but for these type of cases, it should not top $1500, the max.

Ed(NY)

Is it good Deal? Foreclosure Auction - Posted by Ed(NY)

Posted by Ed(NY) on November 29, 2004 at 15:41:35:

A fellow investor picked up a single family house 3/ 1 1/2 in brooklyn, NY in the forclousure auction in january,2004. She paid 205k plus 17k in other costs. Homeowner was living in the property at the time of sale and was not willing to move out. This invester evicted him out through a court action but it took approximately six months for the eviction process in NYC. When the homeowner finally moved out, he trashed the property.

After gaining control of the property she spent 35k to fix it up. It took three month to renovate the property and she was paying 2500 mortgage duing all this time. Upon renovation, she put it up for sale and sold it for 330k.

These are the numbers

Purchase price: 205K
Other Closing costs: 17K
Mortgage: 2500 x 9 = 22500
Sale price: 330K.

IS it a good deal for the effort? please comment.
thanks

Ed(NY)

Re: Is it good Deal? Foreclosure Auction - Posted by Tom NH

Posted by Tom NH on April 14, 2006 at 08:33:50:

I’m getting a different ROI:

Her total investment:
$ 17,000 ~ Closing Costs
$ 19,800 ~ 6% Realtor Selling Fee
$ 35,000 ~ Repairs
$ 1,500 ~ Attorney Fees
$ 22,500 ~ Holding Costs


$ 95,800 ~ Total Investment (actual money out of her pocket)

Based on what she put into the deal, her ROI would then be:

Profit =

$ 330,000 ~ Selling Price

  • $ 205,000 ~ Purchase Price (she didn’t pay this, as indicated by the mortgage payments)
  • $ 95,800 ~ Her investment

$ 29,200 ~ Profit

ROI = [$ 29,200 / $ 95,800 ]X100

ROI = 30.5 %

That doesn’t seem that bad to me.

Tom NH

Re: Is it good Deal? Foreclosure Auction - Posted by Tom-FL

Posted by Tom-FL on November 29, 2004 at 18:50:44:

You left a few things out so I’ll make a few assumptions.

330,000 Gross Proceeds
`19,800 RE Commission


310,200 Net Proceeds

22,500 Mortgage Payments35,000 Repairs
10,000 Eviction (I'm assuming a six month eviction would be lawyer intensive) 205,000 Purchase17,000 Closing


289,500 Costs


`20,700 Difference (Profit)

That’s around 9.24% APR or a little higher.

Since I never got around to learning the cash flow menu which covers irregular additions and withdrawls, I simply deducted the commission off of the sale price and set FUTURE VALUE at $310,200. Then I assumed all the other charges were made on day one, even though the mortgage payments were a month apart, and the repairs and eviction occurred at six months. I put all other costs, $289,500 into PRESENT VALUE. Then set for 9 equal compounding periods. Anyhow, your overall return is probably a few points higher.

This all assumes she only wrote checks and contributed negligible time and labor.

Re: Is it good Deal? Foreclosure Auction - Posted by Randy (SD)

Posted by Randy (SD) on November 29, 2004 at 15:53:49:

If there were no other expenses such as sales costs, she netted $50,000 or just over 19% ROI… not bad I suppose.