Analyzing Tax Foreclosure Property is a critical step! You have accumulated all of your data, and now you have to compare the properties to decide which is your best prospect. An Excel spreadsheet (or the equivalent) is the easiest way to compare Tax Foreclosure Property. I find three documents work best – a General Comparison of the properties, a Home Repair Analysis and a Holding Costs Analysis.
General Comparison
In the General Comparison, I compare
- CAD Values
- Zillow Values
- Bedrooms and Bathrooms
- Exterior Materials
- Age
- Homestead Exemptions
After I do the Home repair analysis for each home, I add
- Low Bid – minimum bid
- High Bid – the maximum amount I am willing to pay based on repairs and potential profit
Home Repair Analysis
Once I have a General Comparison, I create a Home Repair Analysis detailing all the repairs that I can anticipate. Because you cannot view the interiors of the properties, the only choice is to prepare for the worst case. The observable repair categories will come from the following:
- AC Unit – if the exterior unit is missing (theft), calculate this expense
- Roofing – you will have a rough idea whether or not the roof needs repair from your exterior observations
- Sidewalks – Cities may require visible cracks be repaired
- Driveway – repair of cracks is optional
- Exterior of home – Painting is optional and can be expensive. If it is imperative, add expense.
- Foundation – If there are any visible cracks in the exterior walls, you must add foundation expense.
- Windows – if any are cracked or busted, they must be replaced.
In addition to these expenses, I generally add an interior “allowance” for paint and carpet, because most all properties will need this bare minimum interior expense and probably a lot more. The total of these expenses must be added to your bid price when considering the profitability of the property.
Holding Cost Analysis
Finally, you must consider your Holding Costs. These will vary based on home size, holding time and location. The primary costs that should be considered include:
- Insurance
- Lawn Maintenance
- Utilities
