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Radio Show Notes 3/27/18 Tuesday: HUD Foreclosures - Part Two

By popular demand, The Real Estate Show adds a "Part Two" to its discussion on HUD Foreclosures. This is something that every serious real estate investor should know. It's also good for any flexible or creative homebuyers to know. Yesterday, in a little more detail, we covered who HUD is, how a HUD home is a 1 to 4 unit residential property acquired by HUD as a result of a foreclosure action, usually on an FHA-insured mortgage. At that point, HUD becomes the owner of the property, and offers it for sale to recover its loss on the foreclosure claim.

We also covered a little bit about the bidding process, more specifically who is allowed to bid on a HUD foreclosure property. First, HUD homes are made available to owner occupants. As you may know, HUD's mission is to make home ownership more accessible and more affordable to more Americans. The American Dream of homeownership. Also, if the federal government is going to take a loss on a property from having insured it, and then foreclosed on it, they want to make sure that any kind of bargain or savings that comes from this should first be offered to owner occupants.

Then after being offered to the owner occupants, some of them may be offered at a deep discount to police officers, firefighters, and even teachers at up to 50% off the listing price. This could be a great opportunity for someone you know in one of those categories! Finally, after this waiting period, often referred to as the first look period, HUD will offer the property to the general public, which includes investors. This is where the opportunity to buy homes at a deep discount begins. However, many investors miss this opportunity because they think that if only "the left overs" are offered to investors, they must not be good deals. That may be a big mistake.

It is true, that HUD offers up the leftovers to investors, those properties that owner occupants don't want, but viewed differently, that may be exactly where the opportunity lies. You see, when a property can or will not sell to an owner occupant, HUD then labels these properties uninsurable. That means HUD is unwilling to ensure a new mortgage on this property, usually because of the condition of the property. And isn't it true, that we are looking for distressed properties to buy at a discount, fix up and add value, and then sell at a profit? Absolutely!
HUD foreclosures can be and often are great opportunities, however, being well informed is very important in this process. One thing you have to watch out for are fees and closing costs, which are added on top of your offer price. You could be offering $100,000 for a property, and end up paying $104,000, as a result of fees and closing costs. Make sure that when you make your offer that you understand, in advance, exactly what expenses are involved. Also make sure that you were going to legitimate HUD websites, when making your bids. Hudhomestore.com is one.

Learn more about Real Estate Investing and learn HOW by listening to The Real Estate Show with Eric Willner , Live every weekday morning at 8 o'clock (EST) on Florida's Money Talk Radio station WSBR AM740, FM 96.9, and FM 103.9. Then contact us at 888-595-7779 to see how we can help you with your real estate goals. You can also hear us on the free apps: iHeart Radio and TuneIn and the WSBR AM740 app. If you miss the live show, Recorded Rebroadcasts are available 24/7 on Facebook.

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