If there is plenty of value in the home, I would go for it. Improving the garage will increase the value over time. Get a few bids - that garage may still be salvageable. Also if the foundation or slab is still there, that will greatly reduce the cost of a new garage.... more
I would recommend getting a couple of licensed and bonded contractors to the home, prior to purchasing it, to get multiple bids. That way you will know exactly what you're in for (or at least a range). Also, remember that many forclosures are sold "as is" meaning they will not fix any issues you find during the home inspection, so you may need to add additional money to the budget if you find underlying issues with the home. Some banks are now paying for repairs, but many are not, it just depends on which bank owns the property.
Hope this helps!
Best of luck,
Hasson Company Realtors... more