ROI On Foreclosures
My partners and i are trying to analyze various forms of real estate investing to determine general ROI's. I have been given the task of coming up with numbers for Foreclosure properties.
I am aware that deals vary wildly, but I am trying to come up with a range of ROI's if we were to start investing in Foreclosures.
I am basing my anlysis on the following assumptions:
- 75% of FMV purchase price
- 6 months holding costs
- 5% of FMV repair costs
- 100% mortgage loan for purchase
- 4K closing costs
- Average FMV = $200K
- Realtor fees of 6% FMV
With the above numbers, I am coming up with an ROI of about 190%. I am asking for any comments or suggestions on my approach. Am I way off here, or is this an acceptable method? What have you found from your own experiences?
Thanks in advance.
JS. 
Well, as far as holding period, 6 months, not for me. I usually have the property sold in 2-3 months. Usually just reinstate the loan, then have a quit claim. So instead of paying the 150k for the house, i pay the 20k that they are behind, give them 5-10k, then sell it a 200k for 189k. make my 30 and do it again.
[addsig]