HUD Homes

I have some information for you if you can pm me. I basically bought a program that taught me how to go about working HUD. Very inexpensive, but as you gather HUD has stipulations. Also you are right on #1 that you can sell under an LLC, but not sure on your second question. HUD is right for some people, but not for others. You will have to decide, but probably best to work homes that are FSBO in my opinion so you don't have all the hassles of a HUD.

Valerie (Valuni) does a lot of HUD and can do them in her sleep. I'm sure she will see this and give you some valuable info.

Karen

Not only HUD homes have deed restrictions, I represented a buyer/investor when purchasing a short sale property and the bank required a 90 day restriction. Also, here along the Mississippi Gulf Coast, many hurricane damaged homes were built/rebuilt using grants, federal/local funds and they may have deed restrictions. Homes that were built for lower income families may fall into that as well. You may want to put in your offer that the purchase is contingent upon no deed restrictions. You can check with your trusted attorney on your power team for advice.

HUD homes can only be purchased owner occupied or by non-profit groups for the first thirty they are on the market. After that, anyone can bid on them. You have to use an agent and his brokerage has to be registered with HUD.

If you are buying it non-owner occupied, you will need to show that when you bid, and also, if your bid gets accepted, when you fill out their paper work.

There are no resale restrictions once you buy them. HUD has waived all 90 day seasoning. Fannie Mae is the only government entity who still has you agree to the 90 day holding period.

You cannot assign these contracts.

You can view HUD homes at www.HUDhomestore.com.

I have done many of these and they are fairly easy. Just make sure, if you get an accepted offer, that you are very accurate with your paper work. If one thing is off on the contract, typo or anything, you will have to resubmit it. And they always require you have the contract to them in 48 hours (if they don't receive the contract in that time period, the property goes back on the market). So you have to overnight ship them. If you screw up, you will have to send it again and the overnight costs are pretty pricey. Fed Ex is $30.00, USPS is $18.00.
Your agent will be responsible for all of this.

HUD homes can be a great source of good deals.

Good luck,
Jim

Lisa - in addition to the great advice above, the deed restrictions shouldn't be an issue if you're buying the place and then doing a lease option. Most lease options are 6-12 months at a mimumim, sometimes 2-3 years.

So if you're buying it, you become the owner (as you stated), and only when the option is exercised do you actually sell it.

Hope that helps,

- Tom

I really appreciate you all taking the time to reply and share the info with me.

Appreciate it very much.

Good luck to all of you as well!

warmest regards,
Lisa Richardson

if you go to their website hudhomestore.com select a state, then a city, zip code, county, etc depending on what area you're interested in purchasing. There you will see a list of properties that are for sale; however, you need to pay attention to whether the property shows as 'extended' or 'exclusive'. Exclusive means that only non-profit organizations, government agencies, or people who intend to live in the property, can put in offers. During the exclusive period you will be required to sign a legal document stating that you are buying property as your residence and you will live there. Also, to put in offers, you will need a realtor who is registered with a HUD broker.
Once the property shows as 'extended', investors may submit their offers (through the realtors).
Keep in mind that once your offer is accepted, you will have 48 hours to submit signed documents (wet signature) and the EM; if not, the property will be re-listed, and again, there may be an 'exclusive' period first...
Also, you cannot make any changes to the contract once it's submitted; and once you sign documents, provide EM, and escrow opens, you will not get your EM back if you decide to cancel your offer (accepted); therefore it's critical to get your inspections done prior to submitting your offer...

Hi, Lisa,

Here is a crash course for you on bidding on HUD homes. Go to HUDHomestore.com. I see that you are in the N.Y. area, so select New York as your state. You can further narrow you search parameters by selecting county, city, or even zip code if you'd like. Let's leave it at New York. Under Buyer Type, select "investor". This will bring up only those properties that you are eligible to bid on. This morning, the first listing is a house in Philadelphia, New York. Click on that. You'll see that it was appraised on 8-19-2013 for $115K, as is, and is listed for sale for $103.5. It is a 5 bedroom home of 2000 square feet. Before you go any further, click on "Addendums", then Property Condition Report", or PCR. This will list what the appraiser found wrong with the house.

If you are still interested in the place, click find a broker, and select one close to your location. They have to put the bid in for you, and it has to have your actual signature on the bid package, not a faxed copy. They submit your bid. If accepted, they get an e-mail confirming a successful bid. You then have 48 hours to get the properly completed bid package, along with your earnest money deposit, to the proper HUD asset manager. Use UPS!! They are the ONLY service that will deliver it before noon,guaranteed, as required by HUD.

At this point, HUD will automatically set up a closing 45 days from the acceptance date, and a 15 day inspection period. Do your due diligence during this period. If you find an unexpected problem, you can still back out and get your EM back. After the 15 days, all bets are off! If your bid is less that $50K, the EM is $500.00. If it's more than $50K, it's $1K. You now have 45 days to market this property. One last thing- if you bid as an LLC, or other entity, and an individual bids the exact same amount, HUD will always award the bid to the individual, rather than the entity. Hope this helps.

I appreciate you taking the time to respond. I had done a bit of research into HUD homes. I hadn't actually decided to pursue just these homes and like I mentioned in my original post I have a couple of agents automatically sending me listings that are priced at or below a certain value. When looking into these properties they sent I found that many of them were HUD homes. I had initially decided I didn't want to go any further with them because of the restrictions but as there are so many that keep showing up I though maybe I should look into them a little more.

I appreciate you taking the time to respond and for all the helpful info.

Thanks so much.

Best of luck in all your endeavors!

warmest regards,
Lisa

Lisa,

I would definitely consider HUD homes; they can be great deals!

You are right about HUD homes, definitely great deals to be had there.
Thanks again for the info.

warmest regards,
Lisa