Real Estate Buying HUD Homes As Investments
Buying HUD (Department of Housing and Urban Development) homes isn't necessarily a way to get rich quick. These homes are supposed to be sold at market value, after all, which would seemingly make the great deals you hear about a myth. However, there are some profit opportunities here.
One of the reasons you still find good deals on HUD homes - even though they are supposed to sell at market value - is that they are sold "as is." These are houses that have been foreclosed on and repossessed, so the previous owner may not have had the means nor the motivation to properly care for the home. They often have enough problems to scare away most home buyers.
What does this mean? It means that due to the condition, the market value may be low compared to properly-maintained homes. This can mean an opportunity for an investor who is willing to fix a few things. For example, to the general public, a "problem house" can be worth $40,000 less than surrounding homes, while it may take only $10,000 make it look good again.
Buying HUD Homes
What is a HUD home? It is a house that has a HUD-insured mortgage loan on it. When the owner doesn't make the payments, HUD pays the lender what is owed, and then takes ownership of the home. They try sell it quickly, and at market value. Virtually anyone who can pay cash or get a loan is eligible to buy these houses. (HUD employees and relatives of HUD employees are eligible, but must receive written approval from the Director of HUD's Office of Single Family Asset Management in order to purchase a HUD-owned single family property.)
HUD homes are found in all sorts of neighborhoods, although most are meant to be affordable to low-income and moderate-income families. These are homes that generally sell for the same as surrounding homes (except when they need work). To find HUD homes in the price range you want, then, you simply look for neighborhoods with homes in that price range.
If A HUD house need fixing up the asking price will reflect that. HUD may offer special incentives such as an allowance to upgrade the property, a moving expense allowance, or a bonus for closing the sale early. The houses are sold "as is," but HUD will allow you to get professional inspections prior to making an offer. The cost of these will be yours, however, whether or not you make an offer or buy the home.
On most sales, you can request that HUD pays all or a portion of your financing and closing costs. Essentially you just make an offer as you would on any property, except that HUD homes are typically sold in an "Offer Period," at the end of which all offers are opened and the highest reasonable bid is accepted. If not sold in the initial Offer Period, you can submit a bid any day of the week, including weekends and holidays, until the home is sold. If your bid is accepted, your real estate agent will usually be notified within 48 hours.
HUD doesn't loan on these homes, although they do offer mortgage insurance programs that can help you get a loan. Contact a HUD approved lender for more information.
Investing In HUD Homes
HUD gives priority to owner-occupants purchasers. However, if there are no acceptable bids during the priority period, unsold properties are then available to all buyers, including investors. Your real estate agent should have the necessary details.
There are a couple ways to find out what HUD homes are available in your area. You can visit the HUD web site online and see the listings there. A better way is to find a participating real estate agent. He or she will know what is for sale, but also may know what HUD homes will soon be for sale. In any case, your real estate agent must submit your bid for you - HUD generally doesn't accept offers directly from buyers.
When you make an offer, your real estate agent should help you with any paperwork. The settlement date (if your offer is accepted), will normally be within 30-60 days. You need to arrange financing and close the sale within this time, or forfeit your earnest money deposit (or you may be able to pay for an extension of your sales contract). The selling agent's commission will be paid by HUD but only if you make this a condition of your offer.
Of course, when buying HUD homes, you have to analyze them like any other investment. If it will be a rental, you have to do the math to see if you'll have positive cash flow. If you plan to fix it up and sell it, be sure there is a profit after all expected and some unexpected costs. Just because it is a HUD home doesn't men it's a great deal.
Copyright Steve Gillman. To see a photo of the house we bought for $17,500, get a free ebook on How To Buy Cheap Homes, and more, visit: http://www.HousesUnderFiftyThousand.com
Related Tags: real estate, investing, homes, hud homes, buying hud homes
Your Article Search Directory : Find in Articles
Recent articles in this category:
- 5 Reasons to Buy Jasper Real Estate
Jasper is a small town in North Georgia and it is growing rapidly. Since North Georgia Foreclosures - Ellijay Real Estate
Ellijay Georgia has always been known for it's outdoor activities and seasonal festivals. Downtown E - How to Deal With Blocked Drains
A blocked drain is an occurrence that happens eventually to all households. You may have experienced - The Benefits of Hiring a Plumbing Consultant
Your dream home may not always be brand new, with fresh paint and home essentials. There are certain - The Worst Mistake You Can Make When You Apply to Rent a Home
A whole new class of people has become renters and potential renters in America during the last thre - State of Individual Real Estate Markets
Everybody is well aware of the hit that the real estate market has taken over the past three years. - Thoughts on Avoiding the Landlord Trap
I've heard several people say they would never invest in a multifamily rental property because they - An Idea to Increase the Bottom Line of Your Investment Property
Are you pretty sure that you've already maximized the income coming from your property? If you've cl - Finding the Value of a Piece of Investment Real Estate
There is a lot of confusion about how much investment property is really worth. We'll look at three - Arkansas Land For Sale - Search Engine Optimization and Your Website
If you have Arkansas land for sale and are interested in advertising it on your website I have a few
Most viewed articles in this category:
- How High Did Home Prices Really Go
The U.S. Census Bureau released data on Tuesday that revealed where the nation's hottest markets wer - New Homeowners Tips for Household Safety
With so many items on their ¡°buying a home¡± checklist, few homeowners take into considerati - Truth About VA Foreclosures
Many people now days are finding themselves out of work and not being able to make the mortgage paym - Avoid Rookie Real Estate Investing Mistakes
When Robert Kiyosaki, author of the Rich Dad book series, bought his first property he was, of cours - Finding The Perfect Roommate On Craigslist
Craigslist, Roommates, and The Concerns Craigslist is "great" when it comes to looking for housing - The Forgotten Secret To Selling Property - Simple, Quick And Cheap
Why spend big dollars trying to get people to drive a long way to see your house, when your best pro - Get Amazing Results Selling Real Estate Online
This is the age of the internet. Why not take advantage of the widespread use of the internet to ad - Dallas Real Estate Information
In the United States, Dallas is considered as the second leading state according to the area. If any - The Largest Private Equity Indian Real Estate Deal
In the largest private equity deal won by the real estate sector, Morgan Stanley Real Estate has inv - Fractional Real Estate Ownership
Fractional ownership of vacation ski condos is growing in popularity. Park City Utah a popular ski t