New Investor-When to inspect HUD Home?

Question

This post is 2-fold.  First, to introduce myself to Bigger Pockets.  I've been staying in the background, learning as much as I can, and now feel comfortable enough to start participating.  I'm a new investor near St. Louis (IL side), and intend to start with fix/flip, and ultimately buy/hold.

Second part is a question: I've had my offer accepted on a HUD property, and waiting for a copy of the signed contract.  I've paid an earnest money deposit of $1,000, and understand it is not refundable.  Also, the home is winterized, and inspection report indicates a leak in the plumbing system.

I have not done a property inspection yet, and do not see the point in doing it prior to getting the utilities turned back on, and the plumbing leak fixed (after closing).  Any opinions on the timing of inspection for a HUD home that is winterized?

Thanks,
	Kevin McGinnis

David Krulac · Answer

@Kevin McGinnis

For HUDs if you are an owner occupant you can bid contingent upon an inspection.

Depending on your experience and expertise, you or a qualified person should look at the house very closely before bidding.

Jon Holdman · Answer

If you're going to do inspections on a HUD property, do them before you make the offer.  Or at least before you hand over your EM.  Whatever you find now, you won't get your EM back.

Randy King · Answer

Welcome to BP Kevin. I have done several HUDs over the past year and have never done a professional inspection on one of them. I am buying SFHs less than 10 years so I don't have to worry too much about structure, roofs and heating/cooling systems. I use the HUD inspection as a guide but do not rely on it to be 100% accurate. The problems I have run into have been minor so far (I do understand that I will get hit one day for a major expense). We had a cold winter this year and lately have run into several problems due to the houses not being winterized correctly. I have closed 2 in the past couple of months and both water heaters were drained without turning the power off. New heating elements on both. One dishwasher pump was not drained and froze and had to be replaced.

The problem with HUD is that you can have them inspected, however you have to turn on the utilities yourself at your expense and HUD will not fix anything and to my knowledge will not renegotiate. You will loose your EM if you fail to close for any reason. And you have to pay to have it re-winterized.

If I was doing older properties, I would have my contractor walk the property with me to help check things out.