A Luxury Foreclosure in Denver

4 Replies

The house does well worth the price but the issue is how to make money on it?

http://www.redfin.com/CO/Denver/3962-S-Chase-Way-80235/home/34215876

The house is magnificent, and the view is breath-taking. For the listing price of $850K, almost everyone who has seen it agrees it well worth the price. But it can easily take on another $200K to $300K improvements to get to move-in condition for a buyer in the luxury niche market. Not to mention the carry cost before you can get it sold. The other issue is that the architectural and decor style is very personal (it looks more like a club than a residence), which would make it even harder to sell. Also, there is a cemetry by the entrance of the community.

Is this a good investment and how? My concern is the carry cost before it can be sold. I'm thinking about leasing it to companies for consultants accomodation or executive stay. The house easily accomodates 7 people or more.

What's your thought?

I don't know the margins, but luxury homes are high risk as investments and often the REO price does not reflect that. They do have high carrying costs, they do have a limited market.

They tie up a lot of cash. They limit how much you are diversified, thereby increasing the overall risk of our portfolio.

They generally support low rents relative to their cost as compared with houses closer to the median, so if you do have to carry them it doesn't cover your costs.

I need to see a pretty high margin before I look seriously at a luxury home.

From your description its not there. But i don't know the market in Denver.

This looks like a unique house tailored to Asian tastes. All else equal, buying homes that have been built to a very specific aesthetic is a bad choice.

I looked at this a while ago, needs so much and carry cost really didn't make sense for the risk level on the project. If I remember right we were a buyer in the low 600s

what's it worth fixed up?

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