MI Foreclosures | “Greenhabbing” MI Foreclosures

'Greenhabbing' MI Foreclosures

Ryan Burk, a Michigan real estate investor, has taken the idea of rehabbing MI foreclosures to a new level. His company, In The Now Investments LLC, installs energy-efficient products during renovation of the Detroit area homes he purchases. Of the MI foreclosures he has rehabilitated, all are equipped with high-performance insulation in the attic and walls, and they are also outfitted with high-efficiency appliances and insulated windows.

Burk purchases Michigan foreclosures, rehabs and rents the homes then takes advantage of tax credits offered by the US government to receive up to one-third of his investment back. He refer to this new model of buying and selling as “tree-hugging capitalism” or “greenhabbing” for short. He also feels it “has to make sense economically,” while at the same time knows he can “do the right thing.”

One benefit he receives; a tax credit for approximately half the cost when installing high-performance insulation. In addition, he takes advantage of rebates by using low VOC paint and other environmentally friendly products. For example, he nets a $350 rebate when installing a high-efficiency water tank with a ticket price of $525.

This environmentally smart ‘greenhabber’ may just be onto something. Burk states that, “With the government promoting these programs, it’s making it a lot easier to be green.” According to Lynne Bieniek of Detroit-based Lynne Bieniek Appraisers, implementing energy-efficient measures during the process of renovating these MI foreclosures ultimately drives up the appraised values. “If you are making a house more energy-efficient and cutting the costs to operate it, you are adding a good selling point,” says Bieniek.

Burk charges a bit more for his greenhab rentals, but he feels this is unimportant compared to being able to move his rentals fast by offering prospective tenants a forty percent cut in heating costs.

Burk’s team attempts to preserve as much of the original structure as possible. Multiple MI foreclosures are being ‘greenhabbed’ at any given time, but a quick example would be how the decision was made to sand an original wood floor instead of adding carpet or repainting an ornate banister. Where smaller items are concerned, however, Burk will go the extra mile with low-energy bulbs, toilets with 8-gallon capacity and low VOC paints. Tax credits do not apply to these changes, yet Burk feels they still add to the overall ‘green’ element of the MI foreclosures he renovates. “We want to make money, but we add a lot of things just because we want to do the right thing for the planet,” he said.

By purchasing a home for the cost of a car, and adding government-sponsored improvements, Burk feels he ultimately will net a profit when he sells. His portfolio currently boasts a monthly revenue of $50,000. Over the past 18 months, he has sold 40 of the 90 MI foreclosures he has greenhabbed. Some of these homes sold via his web site www.buyhomesdetroit.com. Overall, he feels the system has worked well for him.