Livonia foreclosures as of 2-14-13

So you are thinking of buying a fixer upper,  fixing it and reselling it.  The key is in planning, good estimating.   The oft heard phrase “Buyer Beware” is never more appropriate than when considering the purchase of a fixer-upper.  You must know exactly what you´re getting into before buying.

It´s commonly believed that fixer-upper properties represent easy money that is ripe for the taking – that you can buy it, do a little work on it in your spare time, and then flip it.  This isn’t the case most of the time.  Although, with proper planning and thought, money can be made by buying “fixer uppers”.  And for many first time buyers who intend to live in the house while working on it, buying a fixer-upper can be a great option.   By buying a fixer upper you get sweat equity.  You will gain equity in the home by bringing it up to normal standards.  The key is to buy a home below market price and to be able to put less money into it than a comparable good home.  If you can buy a ready to move in home (in top shape) for $200,000 and you want to buy a fixer upper for $150,000.  Then you should not have to spend more than $35,000 – $40,000 to fix it up to make it a deal.  It´s also less risky buying a fixer-upper when you can live in the house while fixing it. And of course, by living in the house for at least 24 months you should qualify for the IRS exemption of no capital gains.

The most important thing to know before making a decision on such a purchase is what needs to be fixed. Do a spreadsheet.  Jot down all the costs.  Give yourself a cushion for unseen expenses.  Any time you are spending money on improving a home with the notion of selling it later, strive to spend your money on things that buyers can easily see. Things like new paint and removing trash from the property cost little but have instant impact on curb appeal. Simple landscaping is the best.  Landscaping does not bring a large return.

Houses that have only cosmetic problems like peeling paint, an overgrown yard, shag or worn carpet or lots of wallpaper are the best bet. Fixing and cleaning cosmetic issues is fairly easy and inexpensive. It virtually always gives a good return on investment, particularly when you can do the work yourself. Kitchen and bathroom remodeling usually pays a nice return. Don´t be afraid of buying a fixer-upper in need of this kind of repair. Again the key is don´t go over the top.  Do a good job, a nice job.  But if it is a $100,000 house you don´t want to put in Granite counter tops and a jetted tub.  Properties with structural damage, or a floor plan that requires major work to remedy, may not be “fixed up” at a profit.

If you do not have construction experience or done a fixer upper before. Have an inspection for hidden damage performed by a home inspector, a friend that has experience, or construction professional before buying a fixer-upper. Michigan purchase agreements have inspections clauses in them; make sure you use that clause when doing a fixer upper.  Then be sure to negotiate to try and get the seller to pay for all or part of the cost of needed repairs uncovered by the inspection (that were unseen). Often, sellers will be willing to lower the sales price to sell the home “as is” instead of paying for the repairs.  Give the seller three choices, fix it themselves, hire a contractor to fix it, or reduce the sales price so you can fix it.

Be careful that you don´t over pay. Especially if you plan to resell quickly, paying too much up front can doom your plans for quick profit. Research the market for reselling and have an exit plan for selling the house in place before making an offer.

Remember when buying a fixer upper to put in the cost of paying a realtor to re sell it.  Many people forget this. They have figured a $6,000 profit but forgot about the selling commission.

What about the cost of the mortgage and interest?  If you aren´t living in the home, the mortgage payment is a cost!  If it is going to take 4 months to fix it up then figure the payment as an expense.  A $1500 payment adds up.  In four months it is $6000 of profit eaten up.  What happens if the house doesn´t sell right away?  What happens if you have to sit on the house for 10 months?   At $1500 a month then $15,000 of your profit is gone.

If you are not going to live in the home there is one last thing item to remember is that if it is a second home, or investment property (in Michigan) you do not get the homestead exemption.  Your taxes are going to be much higher.  Approximately 40% higher.  You have to figure that in as a cost also.

So when you look for a Michigan investment or Michigan home be sure to plan ahead. Good luck and happy house hunting.

Below are homes in foreclosure that are currently on the market in Livonia as of 2-14-2013:

ADDRESSBATHS.LAVSBEDROOMSSQUARE FOOTAGEBASEMENTGARAGELOT   DIMENLP   PER SQFT
27520 LONG ST1.12983NN40X12029.9084
12366 CAVELL ST12826NN43X13536.3196
20130 ANGLING ST12864YY155X21254.2824
34014 ORANGELAWN   ST12888NY66X30056.3063
20151 DEERING ST131064NY40X14047.9323
18556 FILMORE ST131061NY45X13749.9528
14966 SUNBURY ST131389NY50X20244.8164
14712 ARDEN ST131154NY75X13054.5927
18477 GILLMAN ST13988YN40X13671.8623
19559 BRENTWOOD ST241464NY110X30051.1612
29610 PURITAN ST131136YN70X29365.933
18713 HILLCREST ST131107NY45X13569.467
9944 E CLEMENTS   CIR13972YY50X14082.2016
15325 SHADYSIDE ST12976NN66X14081.8647
9828 SHADYSIDE ST131029YY59X11287.3663
9855 CAMDEN ST1.131078YY80X9690.909
18540 WHITBY ST231147NN80X11486.3121
9422 LAMONT ST131046NY60X13695.5066
11101 LAUREL ST231832NY66X30554.5305
36713 ANGELINE CIR231449YN64X11372.3947
8959 VIRGINIA ST231278YY55X140101.6431
31704 HALDANE ST1.131155YY60X119119.4805
19320 BRENTWOOD ST231250YY110X300114.4
14981 NEWBURGH RD2.152209NN65 X 12065.5952
32177 MEADOWBROOK ST1.131710NY60X12084.7368
33680 ORANGELAWN   ST231232YY66 X 294121.7532
28300 OAKLEY ST231821YY100X13485.0631
31100 7 MILE RD342663YY124X25559.3315
30047 5 MILE RD343338YY153X21065.9077
28397 6 MILE RD342200YY183X561113.5909
20486 MEADOWVIEW   ST442310YY122X198119.0476
15510 SURREY ST5.154023YY60 X 13073.9497

If you are looking for the latest and greatest list of Livonia  foreclosures (or any other southeastern city) let me know!

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