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Anyone ever bought and fixed up a foreclosure?

post #1 of 31
Thread Starter 
We wouldn't be flipping it, we actually want to live there. It has about three times the amount of yard space and 300-400 more square feet + an unfinished basement (almost unheard of in this area) than the house we're in now.

Our 3rd boy is due in September and our 2 bedroom house is getting really small. I know we could make it work and it'd be fine, I'd just rather have more space if we can make this fly.

Anyway, of course with a foreclosure it needs a lot of work. It is currently bank owned. We walked through it last night and dh said he thought it would need $15-$30K worth of work. But even if we put $30K into it, we'd only have $80K in the house (including the purchase price). And the work would need to be done before we move in.

I am so swayed by the big yard (the dogs and boys would love it) and the space and the layout of the house that I'm afraid I'm not being practical. So has anyone ever done this, especially with kids?
post #2 of 31
We are thinking of doing this.
post #3 of 31
I have not, but my SIL and BIL did. They bought the house for $25K- borrowed money from MIL to buy it. They lived with her mom while they worked on it- her dad is handy and was able to do a lot of the work. The house was unlivable until they did the work. I believe it took them about four months to finish and they spent about 20K-30K. They then refinanced it for $80K and paid MIL back and paid off the credit cards, etc, they used to pay for materials. . They sold it this year, 6 years later, for 160K. Not a bad return on investment. (They are moving to FL and looking for another foreclosure)
post #4 of 31
I've been toying with the idea about doing this as an investment, and while that may be completely stupid (it could take years to sell a house in this economy), I don't think you're being unreasonable. In your shoes, though, there are things I would want to check.

1. The only things you can't change about your house are the foundation and the location. Is the foundation sound? Is the property someplace where you want to live?

2. What kind of work does it need? Cosmetic repairs are fine. Some level of remodeling is fine. Serious plumbing, wiring or structural issues are a different thing. Make sure the place isn't at risk of burning up or falling down.

3. How much would the work cost? Figure out an amount, then figure out what would happen if you ran over by 10%, 20%, 50%. How long would the work take? What absolutely must done to make the place livable, what can slide for a few years?

A big yard, enough space for your family, and a good layout are all really reasonable things to be swayed by. Just make sure you aren't buying into a property that *can't* be fixed.
post #5 of 31
When we were first married, dh and I extensively rehabbed a house while we were living in it. Our lives were completely upside down during the construction. He's been talking about doing something similar again...because we really did love the whole process, but at this point, with three kids, I would NEVER consider living in the house while it was being renovated. Life with three kids is chaotic enough, but throw in the mess of construction, safety issues, how disorganized everything is, the debris and inevitable dust...

So you're right to want to wait until it's done to move it...so can you swing two housing payments for a couple of months?

I say look at your budget and see where you land. If you're needing more space, you like the house/neighborhood, and the marked being what it is, it might be a great opportunity for you!
post #6 of 31
Yes.

It wasnt a foreclosure, but an Estate that the son of the deceased was just eager to get rid of. The yard is a good size, but was in rough shape. The entire house really needed to be gutted, rewired, new paint, floors. The whole nine.

We purchased oue house for 78,000. it took us roughly 3 months and about 5 grand to get it where it was livable for us. Then over the course of the next 6 years, we refinanced, put about 30 K more into it, and it is now our dream home!

There was alot, and I mean ALOT of blood sweat and tears. Times where I had no kitchen for like 4months. A skeleton of a bathroom for 4 months. Brushing my teeth and doing my hair in kitchen. At one point, the entire back side of the house was COMPLETLY OPEN for like 3 days. Anyone could just walk in if they knew.

It was all so worth it. Granted we did only a little bit of it with one small baby. But the addition was done while I was pregnant. It wasnt fun, but defiently worth it!
post #7 of 31
What's your tolerance for mess and chaos? That's the critical thing. And I don't mean over a weekend: I mean plaster dust for months settled into the crevices of your kids' toys and baby gates in weird places because the floor is pulled up or whatever.

Our fixer-upper was pre-kids...and I'm personally glad.
post #8 of 31
Thread Starter 
Quote:
Originally Posted by MeepyCat View Post
I've been toying with the idea about doing this as an investment, and while that may be completely stupid (it could take years to sell a house in this economy), I don't think you're being unreasonable. In your shoes, though, there are things I would want to check.

1. The only things you can't change about your house are the foundation and the location. Is the foundation sound? Is the property someplace where you want to live?

2. What kind of work does it need? Cosmetic repairs are fine. Some level of remodeling is fine. Serious plumbing, wiring or structural issues are a different thing. Make sure the place isn't at risk of burning up or falling down.

3. How much would the work cost? Figure out an amount, then figure out what would happen if you ran over by 10%, 20%, 50%. How long would the work take? What absolutely must done to make the place livable, what can slide for a few years?

A big yard, enough space for your family, and a good layout are all really reasonable things to be swayed by. Just make sure you aren't buying into a property that *can't* be fixed.
1. We are planning to have a contractor friend(dh is in the electrical industry so knows tons of great electricians and contractors) to come do a very detailed look through of the house. The location is great.

2. We won't know the extent of the repairs until we have someone go through the house. Just to look at it, we know it needs a garage door, some light plumbing work, some ceiling work, new flooring throughout, paint throughout, new kitchen counters, and an oven and vent-a-hood microwave. Of course, most of that is cosmetic. The "bones" of the house have to be good for us to go for this.

3. Great questions. I'll be sure to discuss them with dh. We are looking into a 203K loan, which is a rehab loan, so we can roll the price of the repairs into the initial loan. We don't have the liquid income to do it out of pocket.

Quote:
Originally Posted by cristina47454 View Post

So you're right to want to wait until it's done to move it...so can you swing two housing payments for a couple of months?
Yes, we can. We will be, hopefully, renting out the house we're living in now.

Quote:
Originally Posted by GuildJenn View Post
What's your tolerance for mess and chaos?
*looks around* I'd say my tolerance is pretty good.
post #9 of 31
Will the house go to sheriff's sale?

I had an acreage I was sort of interested in last year that was being sold at a sheriff's sale.

It must have turned into a bidding war. And sold for way more than I would have ever guessed (or would have bid in a million years).
post #10 of 31
Thread Starter 
I have no clue. I found it on realtor.com. The agent I spoke with said it has been on the market about a month and already had an offer, which the bank turned down. I have no info on it beyond that, really.
post #11 of 31
I only skimmed this thread so I may have missed it if someone mentioned this already but if you make an offer than you should make it contingent upon it passing a thorough home inspection.

But even a thorough home inspection will only identify visible items, and if your inspector is really good, a few things that can be discovered by the other senses such as smell and sound but you can't really count on that. In which case you are at a disadvantage on a bank owned property since while the owner is generally under a good faith obligation to disclose any defects having a material effect on the value of the property, the bank isn't going to know anything (for instance a water problem that may have led to a hidden mold problem).

BTW, we almost went through the purchase of a bank owned but then I learned I was going to lose my job. I have mixed feelings about whether I may have dodged a bullet.

~Cath
post #12 of 31
I just wanted to add what it is like from a child's perspective. When i was about 12 years old my parents bought a small one bedroom cabin on a lake which we all moved into (3 kids and 2 adults). For two years i rotated between sleeping in a closet to the middle of the dining room floor while my stepdad and a bunch of local amish folks built an entire second floor and revamped the whole downstairs also. It was crazy and uncomfortable for those years but what i truly remember is the amazing home we ended up with. Once i had my own room and the whole house was just beautiful and on the lake, it was all worth it.
post #13 of 31
We did/are doing this! Our stories match up alot! We were in a two bedroom house when our third son was born...we stayed there for two years, but decided that the strange real estate market was our opportunity to get the space and neighborhood we wanted.

We closed in August and worked on the house around the clock for several weeks before we moved in...we continued and continue to do tons of work on the house and we really love it now.

We have put about $20 in and are going to put at least another $10 in but we got a house for a good $100 plus below comps so we feel okay about it. Plus we got to pick the floors we wanted, the appliances we wanted, the paint colors we wanted rather than paying for a house in good shape with different decor that we want - you know?

If you decide to do this check out the SAHP with fixer upper threads on the SAHP's page
post #14 of 31
Quote:
Originally Posted by mnnice View Post
Will the house go to sheriff's sale?

I had an acreage I was sort of interested in last year that was being sold at a sheriff's sale.

It must have turned into a bidding war. And sold for way more than I would have ever guessed (or would have bid in a million years).
Yeah, around here banks are starting to want houses to go to auction rather than taking short sales or any sort of deal, because houses at auction are oftentimes selling for MORE than their owed amounts. I was looking through the recent list of foreclosure auctions for our area, and houses at auction are selling for more than most houses are listed for via regular estate listings.
post #15 of 31
Ours was a forclosure. It sat empty for nearly 3 years when we cam eaccross it. We picked it up for a mere $57k. (4 level, 5 bedroom home) It was a sound house with only minor issues (besides the roof, which we still need to do) but livable. We've put only a couple thousand in it and it was last apraised at $92k. We have done even more work to it since then (the entire kitchen!) and know we could get over $100k if we wanted now. We don't plan on moving anytime soon though!

The process has been both emotional and tiring and we are no where near done. But it has been totally worth it so far. I have some pictures online if you want to see some of the transformation... http://gallery.me.com/deppemn#100107
post #16 of 31
I would suggest that your offer be contingent on a formal home inspection. Even if yout DH's contractor friend says things are OK, it is better to have s neutral 3rd party (who knows he/she could be liable) to look over everything. Also, while contractors are very knowledgable, they do not specialize in every area, so could overlook something big.

We had an offer out on another house (which our contractor friend and our home insurance adjustor friend both looked at and said only needed cosmetic work. The home inspector found evidence that there was insufficient insulation in the walls. When confronted, we found out they had burst a pipe and flooded part of the house. They had replaced all the sheetrock, but had left out the bottom 1/3 of wall insulation. It was full of dead (and live) insects.

I was horrified. It was the best $$ we ever spent.
post #17 of 31
Our house was a foreclosure that we bought for $50K. I think it appraises for about $90K (which is low end of average for our area). We knew it had issues, but it was worth it due to the location being exactly where we wanted. We still have several things that we need to fix when we have the means (like a new roof, 2nd bathtub that doesn't leak, new siding, replace rotting bathroom floor...etc!).

While we have had issues with things falling apart due to poor construction, it was still a good decision for us. We are lower middle class in income, and this was the only way, at the time, that we could afford to live in the country with a big yard for the kids to run around.
post #18 of 31
We did. The one we moved into didn't need a lot of rehab work and we didn't care about cosmetics, so dh was able to get it ready to move into in just a few weeks. The major things he had to deal with were replacing the water heater, cleaning the carpets thoroughly, fixing some issues with the tub, etc.

I would recommend being *very* cautious. It can be a big mess, or it can be a huge blessing.
post #19 of 31
Someone who has actually done this may know better, but I don't think you can make the offer contigent upon inspection with a foreclosure. You need to look at it, have someone look at it for you and then put in the offer. They accept or decline- the home is as is. You are dealing with a bank, not a seller in this case.
post #20 of 31
We just toured a foreclosure that was contingent. Someone else beat us to the bid but when they found out the septic had failed, the bank paid for it. So it can happen, ask the realtor.
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