HUD Homes for Sale – Flipping Investors
Realty Trac reports that institutional investors have bought more than 386,000 single family houses across the country since 2011. Today, their robust buying pace is slowing substantially as they move to profit from their investments. Now, most of their effort is towards stabilizing their property management operations and bundling houses into investment packages to be sold to investors on Wall Street. This means less competition for individual investors for the remaining foreclosed HUD homes for sale.
These institutional investors are now even selling off some of the homes they bought. Homes being sold are ones that need substantial repairs. It’s not likely these will be bought by owner occupants, which means there is potential for investors here to rehab and flip these HUD homes for sale. Because individual investors don’t have to deal with the bureaucracy that institutional investors have and are much more efficient at rehabbing and flipping houses, there may be opportunity here. Still, the better opportunity is probably in the less competitive market for houses still for sale directly from HUD.
HUD Homes for Sale – the Investor Buying Process
HUD has two major categories that determine when an investor can bid on a foreclosed house. HUD does favor selling to owner occupants. If the home is insurable by the FHA there is a 15 day waiting period during which only owner occupants are allowed to bid on HUD homes for sale (this has been reduced from a previous 30-day waiting period). If there are no bids or no acceptable bids, investors are welcome to make bids. If HUD homes for sale need more than $5,000 in repairs, they are not considered FHA insurable and investors are allowed to submit bids 5 days after owner occupants are allowed to. With these HUD homes for sale, the only way you can get FHA insurance is through a FHA 203K loan.
HUD does prosecute investors that claim they will be owner occupants and the penalties can be 2 years of prison time and a $250,000 fine. HUD homes for sale are considered owner occupied if you or anyone on the deed lives in the home at least 50% of the time and are not buying a second home. Additionally, you must live in the home at least 1 year before you can sell or rent it. These conditions make it difficult for most rehab and flip investors to qualify as an owner occupant buyer of HUD homes for sale.
Are HUD Homes for Sale a Good Deal for Investors?
Of course, that depends on many things. Those needing more than $5,000 in repairs can be good investments because few owner occupants want a home needing immediate repairs. Additionally, owner occupants often can’t obtain a loan for these homes.
After that, it becomes a situation of how many HUD homes for sale are on the market and how many other investors are bidding on them. HUD has an appraisal done on the home before listing it. For unknown reasons, the appraisals on HUD homes for sale typically come in well under market value. HUD will take less than the asking price and HUD homes for sale typically have the price reduced after being on the market for 35 to 50 days. There are good reasons that investors should look into HUD homes for sale.
If you want to work directly with me on the HUD homes for sale business model or any of the other investing models that have proven highly profitable, please join me at www.wendypatton.com/what-is-wendy-pattons-inner-circle.
Besides reading this article about HUD homes for sale, you’ll want to read this other useful information that I offer free. Please take advantage of it today.
Can Landlords Break a Lease Deal?
Protect Your Lease Agreement with an Option to Purchase
Homes for Rent or Flipping for Profits
How a Land Contract or Owner Financing Can Work for You
Real Estate Q&A – Lease Option -V- Lease Purchase
Several times each week, I make the most current real estate investing information available to readers. This time, it’s about the HUD homes for sale investing model but the information I provide changes constantly to stay current with the market. Be sure to check back at: www.wendypatton.com. Also, get started learning how to do NO CASH lease options on real estate by picking up a copy of my bestseller book: Investing in Real Estate with Lease Options and Subject-to Deals.
By Wendy Patton
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