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[ Follow Ups ] [ Post Followup ] [ The Forum Board ] [ FAQ ] No, this deal doesn't pencil out. Posted by Ward-CA- on May 05, 2003 at 7:46 PM In Reply to: Is This A Good Deal? posted by Steve Getzinger on May 05, 2003 at 5:20 PM : I have a newbie question, : I am in the Los Angeles area and think I have the makings of a good pre-foreclosure deal. I am hoping to get some feed back as to whether or not it is in fact a GOOD deal. : The home has been deliquent for 5 months and the arrears are aproximately $5,787. The loan amount is $118,146. The estimated market value (using CMA) is 150,000. : Loan (no liens or other loans) = $118,146 : Arrears = $ 5,787 : Fix up costs = $ 5,000 : Total = $128,933 : Est. Market Value = $150,000 : Net Gain = $ 21,067 : Is this worth pursuing and should I look to give $5,000 to the owner for moving costs? =•=•=•=•=•=•=•=•=•=•= Steve, You haven't made an allowance for your future reselling costs (commission, transactional expenses, etc.). Nor have you deducted an allowance for your monthly carrying costs or PITI (principal, interest, taxes and insurance) between the day you buy the property to the day you estimate you'll close your resale escrow. Let's assume you don't spend any money on your acquisition transaction because you know how to do all the paperwork without the benefit of an escrow (see Archived Article- “Completing an Equity Buyout in CA”). So, I’d figure a resale commission expense of 6% and your transaction expense of 2.0% . That’s 8.0% of your sales price of $150K = $12,000. Along with that allow for 5 months of interim payments. That’s another $5,787 dollars. If you subtract from your Net Gain estimate $21,067 the resale expenses of $17, 787 dollars you might make $3,000. So no, I don’t think this deal is worth pursuing—even if you don’t give the seller a penny. Hope this helps. Follow Ups: Post a Followup: Name : E-Mail : Subject : Comments: : : I have a newbie question, : : I am in the Los Angeles area and think I have the makings of a good pre-foreclosure deal. I am hoping to get some feed back as to whether or not it is in fact a GOOD deal. : : The home has been deliquent for 5 months and the arrears are aproximately $5,787. The loan amount is $118,146. The estimated market value (using CMA) is 150,000. : : Loan (no liens or other loans) = $118,146 : : Arrears = $ 5,787 : : Fix up costs = $ 5,000 : : Total = $128,933 : : Est. Market Value = $150,000 : : Net Gain = $ 21,067 : : Is this worth pursuing and should I look to give $5,000 to the owner for moving costs? : =•=•=•=•=•=•=•=•=•=•= : Steve, : You haven't made an allowance for your future reselling costs (commission, transactional expenses, etc.). Nor have you deducted an allowance for your monthly carrying costs or PITI (principal, interest, taxes and insurance) between the day you buy the property to the day you estimate you'll close your resale escrow. : Let's assume you don't spend any money on your acquisition transaction because you know how to do all the paperwork without the benefit of an escrow (see Archived Article- “Completing an Equity Buyout in CA”). : So, I’d figure a resale commission expense of 6% and your transaction expense of 2.0% . That’s 8.0% of your sales price of $150K = $12,000. Along with that allow for 5 months of interim payments. That’s another $5,787 dollars. : If you subtract from your Net Gain estimate $21,067 the resale expenses of $17, 787 dollars you might make $3,000. : So no, I don’t think this deal is worth pursuing—even if you don’t give the seller a penny. : : Hope this helps. Optional Link URL: Link Title: Optional Image URL: [ Follow Ups ] [ Post Followup ] [ The Forum Board ] [ FAQ ] WWWAdmin 2.0a © 1997 Matt Wright and DBasics Software Company, All Rights Reserved

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