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How to be profitable when buying Metro Detroit HUD homes

Investing in Metro Detroit HUD homes

Here is how to figure whether you are going to make money when buying Metro Detroit HUD homes as an investment.

First how much will your mortgage be.  I myself am looking at a Metro Detroit HUD homethat I want to buy at $40,000.  My worst case scenario for the mortgage would be $293.51 a month.

Right now the Michigan property taxes are $964 for the winter and $999 for the summer for the total tax bill of $1963 a year.  Now that is homesteaded taxes.  If it is non homesteaded (which means it is an investment property) the taxes will be roughly about 30% more.  So I am guessing the taxes will be about $2600 a year. 

So if the mortgage is                         293.51 a month

       the property taxes are              216.66 a month

       and homeowners insurance is      60.00 a month

                                                   $570.17 a month

If I can rent this 1000 square foot home for $800 a month then I would clear about $230 a month.  Positive Cash flow is what you want when you buy a Metro Detroit investment property.

Now that wouldn't be a bad deal.  I'll let you know whether my bid gets accepted.

Russ Ravary Your Oakland and Wayne County Realtor

You can search Metro Detroit HUD homes on McBreo.com or I can email you the latest Metro Detroit HUD listings weekly 

My Quote of the day is:

At times the road of life can seem dark, cold, and lonely. One day it seems, nothing in the world can stop you from accomplishing your dreams. Then, unexpectedly a situation arises out of nowhere and the doubt, fear, and anxiety creep in. Perseverance Quotes give us the insight and strength to do what's necessary to accomplish your most treasured and sought after dreams and goals. They provide you that little extra boost you need to keep on keeping on even when the world says it can't be done. -- Robert Alan

 



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Posted on Jun 17, 2009 @ 11:59 am by russ.ravary - View Profile
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Dreams and Metro Detroit homes

I have a buyer that wants to buy a home in Dearborn or the University District in Detroit under $50,000.   I have sent her a couple of lists of homes and of course the ones that peaked her interest were the 3000 square foot homes for $50,000. 

Two were sold and one was in terrible shape.  She told me she was going to have to find another real estate agent if I couldn't find her more big homes like that to look at. 

Let explain the story further.  These Metro Detroit home buyers have no money.  They are getting down payment assistance!  And she wants to buy a big house.   I tried to explain to her the costs of maintaining a big home.  There are:

  • big utility bills  (the heat bill on that size of a house will range from $350 - $500 a month)
  • large maintenance costs  ( new roof for that house may cost from $7000 - $10,000)

How is a person that can only afford a house payment of about $500 afford a house like that.  They can't!  Sadly this home buyer is out of touch with reality.  She can buy a $3000 home but she can't afford to take care of it, or bring it back to liveable condition. 

Sorry Ms. Metro Detroit home buyer but my ethics tell me you need to work with a  different real estate agent.  I'm not going to help you buy a house you can't afford to take care of.  It's crazy.  You will end up like some of these other foreclosure people in 5 years.  Out on the street.  You have no money.  Save some money up and wake up you can't afford it.

So good luck on your venture with the other real estate agent.  You are going down the wrong road.

Russ Ravary Your Local Dearborn real estate agent that serves Wayne and Oakland County 

 

Search Dearborn real estate and Dearborn foreclosures and get the latest listings emailed to you directly

 

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Posted on Jun 13, 2009 @ 8:43 am by russ.ravary - View Profile
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Metro Detroit short sales

If you are trying to decide whether to let your home go to foreclosure or do a short sale this is my thoughts.  Would I list my Metro Detroit home as a short sale or let it go into foreclosure?

  METRO DETROIT SHORT SALE   METRO DETROIT FORECLOSURES
REPAYMENT

Yes you could owe the bank the difference of what you owe.   Many agents gloss over this.  You should have a signed letter from the bank saying that you won't owe for the deficient.  Bank of America makes you sign that you are responsible for the loss.

 

  I have never heard of a bank coming after you.  President Bush signed a bill exempting principal resident sellers from getting a 1099 for taxes. 
EASE of DOING

Horrible.  Banks take their sweet time and do not communicate well at all.  You never know what is going on.  Your bank will want income documents, explanations and proof you can not pay.

 

  Very easy to do.  Just don't pay the bill.  No having to clean the house for showings.  No jumping thru hoops to prove to some bank guy in some other state.
TIME NEEDED Metro Detroit short salescan take from 2 months to 6 months to complete.    In Michiganwhen you don't pay your mortgage for three months you go into foreclosure.  Then a sheriff sale is scheduled.  Then you can live in the house for 6 months from the date of the sheriff sale.  This could add up to a minimum of 9 months of free living for somebody that can't pay.

MONETARY ADVANTAGE

In a short sale you could owe and be responsible after the short sale loss.    You can live for up to 9 months free and maybe more.  You should be able to save to get back on your feet and have deposit money for a rental apartment or home.
CREDIT ADVANTAGE A bank won't let you do a short sale if you are not behind on the mortgage.  So you have to have mortgage lates.  The issue is how many mortgage lates and how many months behind are you.  90 days late is considered by credit reporting agencies as a foreclosure whether you are in a foreclosure or not.  No bank will give you a loan for a new home for 3 years either.   If you pay the rest of your bills and maintain the rest of your credit you should be able to buy another home in as little as 3 years.
       
       

Bottom line in my opinion it is crazy to do a short sale.  The one glaring reason is why would you open yourself up to owing money by doing a short sale.  Let it go to foreclosure and be done with.

Search Metro Detroit area foreclosures and short sales 

 

Russ Ravary your Oakland and Wayne County real estate agent



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Posted on Jun 06, 2009 @ 8:16 pm by russ.ravary - View Profile
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Buying Metro Detroit foreclosures Part 1

How to Buy Metro Detroit foreclosures better!

Buying Michigan bank foreclosures are a little different than buying a home from a individual home owner.  Here are some of the ways banks are different from individual home owners.

  • Banks sometimes have a third party that does the negotiating for them
  • Banks are not going to fix anything that needs repair
  • Banks have special addendums that protect them the bank for being sued
  • Those addendums can not be changed in any way, if you don't sign them you don't buy the house.
  • In those addendums there usually is a per diem fee.    What that means is if you go past the closing date you may have to pay up to $50 -$200 a day for every day you don't close.
  • Banks do not have fill out sellers disclosures because they have not lived in the property so you have no idea of what the house's possible problems are.
  • Banks are selling the house "as is" 
  • When you buy the house you still can have the house inspected but your two choices are back out or accept the house as is.  Most banks won't renegotiate the price. 
  • Banks may immediately respond to your offer, or it may be a month before you get a signed purchase agreement from the bank
  • Until you get a signed agreement you don't have a true deal.  A real estate transaction in Michigan is not binding until is signed by both parties and is in writing.
  • You are usually responsible for turning the utilities on to get the house inspected.  You have to put them in your name.
  • Your earnest money deposit will usually be held by the listing agent.  If something goes wrong it will be much harder to get your earnest money back.

 There are lots of great metro Detroit foreclosure deals but I have listed many of the ways foreclosures are different from "regular" home purchases.  It is worth buying a foreclosure and going through the additional issues if you find a Metro Detroit foreclosed home that is bargain priced for the condition it is in.

That is the key.  Is the foreclosed home bargain priced for it's condition?

Keep coming back to read more about buying Metro Detroit foreclosures and how to get the best deal.

Russ Ravary your Metro Detroit foreclosure specialist 

 

Get the latest Metro Detroit foreclosures emailed to you daily or weekly so you don't miss out on the deals.



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Posted on May 13, 2009 @ 11:10 pm by russ.ravary - View Profile
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Do you really want to be a Detroit Landlord?

Detroit Investment properties

I get a kick out of all these people from around the country wanting to buy Detroit foreclosures.  "You can buy Detroit foreclosed homes for as little as a $1."  scream the media.  I get calls and emails from around the country and even around the world.  But my morals and ethics won't allow me to sell anybody a home in Detroit unless they come here and see what the City of Detroit is like and look at Detroit foreclosures first hand. 

Anybody that has come here has decided not to invest in Detroit.

The City of Detroit Administrationhas just added a few more money makers to their money making arsenal.  Right now they charge for an inspection.  I believe it is $250 for the home inspection when you buy a house.  Does it really mean anything....no.   Thousands of Detroit home inspections have been done in the last few years but the City of Detroit lacks the enforcement power or manpower to follow up on them and to go back and re-inspect them once the houses are bought.  So some of the inspection violations are never fixed.  I myself believe it is a $250 Money maker for the city.

Here are two more items that Detroit landlords have to be aware of when you buy a house.

  1. If your tenants or anybody else dumps junk  in front of the house for the trash.  ie. when you evict somebody.  You can't move all the stuff to the curb and hope the trash man gets it.   You get a ticket for it even if your tenants do it when moving out.  Even if somebody chooses your vacant home as a dump site.  You the Detroit landlord will receive the ticket.
  2. If your tenants or anybody leaves a junk car in the driveway or in front of the house.   You the Detroit landlord will get a large ticket and pay for the removal. 

Your Detroit investment property can be a liability.  Just lately the City of Detroit added these money makers to the list. 

If a Detroit City inspector finds a vacant home or vacant Detroit investment property, they will post an Emergency Notice on the property, giving the property owner 24-hours to secure the property in accordance with new City of Detroit standards for vacant property. Here is what has to happen.  You have to board all of the  basement windows, any windows lower than five feet, front and back doors, and all porch windows. If the landlord or homeowner does not secure within 24-hours, the City of Detroit inspector intends to board at the cost of the property owner, landlord, or bank owner. Here are the costs that the property owner, landlord, or bank will be charged:

  • $500 Administration Fee
  • $300 - $400 Board-Up Costs
  • $300 in fines (issuance of ticket)

WELCOME TO THE CITY OF DETROIT.... LANDLORDS AND INVESTMENT PROPERTY BUYERS

There is money to be made buying and becoming a landlord.  There are deals in Detroit foreclosures.  There are good opportunities for Detroit investment properties but it is not for the novice investor, not for remote hands-off investors.  You can make money if you are a hands-on diligent Detroit landlord with time to manage and watch your properties.

But I wanted to warn you about potential pitfalls and what the City of Detroit inspectors will cite you for.  The city needs revenue and there is no better way to get it than from banks and landlords who are making money in the City of Detroit.

Gotta love them!!!

Search Detroit foreclosures and get the latest Detroit foreclosure listings emailed to you.    Be sure to send the the section of city that you like.  There are thousands of Detroit foreclosures under $10,000 and there is too many to email at one time.


My quote of the day is:

When plunder becomes a way of life for a group of men living together in society, they create for themselves in the course of time a legal system that authorizes it and a moral code that glorifies it.

Frederic Bastait

 

 

 



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Posted on May 12, 2009 @ 6:50 am by russ.ravary - View Profile
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Russ Ravary
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Plymouth, MI 48170


Phone: (734) 414-3261
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