How to Tell which Properties need Minimal Repairs AND .....

Question

Those properties that will " Easily " get approved and have the least amount of trouble in getting financed and or the money in Escrow for those repairs ?

I've been  looking over the properties listed on the HUD website, as well as the HomePath website, and some Properties say that they ARE Insured, while others say they are NOT insured... or Un-Insured

So for the properties that are Insured, what exactly does this mean ?

Does this mean that if a Property is Insured, that there is minimal repairs that are REQUIRED to be down... under $5,000 worth of repairs needed, based on the bank sending out an inspector/appraiser , and them giving it an Insured Passable grade ?

Reason I'm wanting to know is, that if a property is Insured and thus this means that the Bank or Lender that owns it is saying that the repairs they will require to be done before they will finance the property is under $5,000 .... Then By the pictures alone, if I can see that all else is needed / I'm wanting to do is to update it a little bit , I.E. new flooring and paint the interior, and maybe paint the cabinets and replace the countertops in the kitchen and put on some new hardware and the total of these upgrade is under $5,000 ....... Then if my Budget I have saved up in cash and set aside is $10,0000 , I should then in Theory be good to go in having enough money to pay for the MANDATORY repairs as stated by the Lender/Bank, as well as do any upgrades to the property that I see fit, and stay just under my $10,000 set aside cash reserves ... In theory :)

Mark Gallagher · Answer

@Michael Dunn

Yes, look for the agents that are selling the most REO in your area. They might no work with you directly but someone on their team should be able to assist you.

Michael Dunn · Answer

Mark,

great advice and thank you for all of your insight and help

Is there a reliable way for me to go about finding a local

REO listing agent in my area .... Memphis,TN ?

Is there a website that lists these agents ..... the HUD and HomePath websites themselves I'm guessing ?

Thank you again

Mark Gallagher · Answer

@Michael Dunn

To finance properties to flip, you're going to want "little old lady" houses that are in great condition but severely outdated. That is the easiest path to the promised land. REOs and foreclosures are not the easiest path, but still doable. You need to find an REO listing agent who is willing to hold your hand and get utilities on, etc. for you to be able to finance that property.

Aaron Wyssmann · Answer

@Mark Gallagher

Thanks for the great answer.  I've purchased HUDs before but I have a private lender so I don't ever pay too much attention to the financing details but it always great to know exactly what they mean.  Thanks for clarifying.

@Michael Dunn

Sorry I didn't see your reply to my answer above.  Looks like Mark has us both on the right track now.  Good luck.

Michael Dunn · Answer

So your best bet to avoid any financing of the property issues, is to " Hopefully " find a property that is an REO/Foreclosure that the previous owner took care of and just could no longer afford the note, and moved out without leaving the property in shambles

I know you can't get a house such as mentioned above for as good of a deal s you can o one that needs some work ...... But could you still " Likely "  still get ANY property that's listed on these websites..... could you get the property for What the Bank has in it still ?

Or will you always have to pay more than what they are still owed on it ?

I'm sure that the longer a property has been listed ( regardless of if it needs much work done to it or not  ), that you stand a better chance of getting a deal on it ?

Mark Gallagher · Answer

That depends. That depends on if you qualify for financing, and if the property qualifies for financing. The property needs to be functioning with no safety issues in order to obtain most types of financing. Most foreclosures, REOs, and HUD properties, if one valve is broken, one pipe cut, they won't turn water on and you won't be able to get financing.

Michael Dunn · Answer

Mark,

Thank you too for your reply

So does this mean that as long as I have enough money in Cash to put Both 20% down , as well as pay for all of the repairs in Cash ..... That I should be able to qualify for one of the listed properties on either of the two websites listings ?

Mark Gallagher · Answer

@Michael Dunn

@Aaron Wyssmann

Insured means you can obtain a non-rehab FHA loan on it as it stands with no repairs.

Insured escrow means there are some minor repairs to be made but you can obtain a non-rehab FHA loan provided repair money is set in escrow for the amount specified.

Furthermore, HomePath properties do not make this distinction of insured vs. uninsured. Only HUD sales do this to accommodate FHA buyers.

Michael Dunn · Answer

Hi  Aaron ,

Thank you for your reply

This is what I was thinking too, in that those properties that are insured will only need minimal ( if any ) required repairs

So then ..... if I put 20% down and pay in cash for any and all repairs ( both required and any updates/upgrades that I may want to do to the property ), then I shouldn't have a problem in getting a conventional loan on a HUD or HomePath property ( so long of course, s log as I meet the Credit score and DTI requirements for a Conventional loan ) ?

Aaron Wyssmann · Answer

Michael,

What "insured" means on those properties, at least I'm pretty sure, is that the property can be backed with a  government loan (i.e., Fannie, Freddie, FHA, etc).  They are not making any guarantees on the property nor will they.

Now that being said, if they know that it can be insured then in most cases that means that particular property shouldn't have major repairs like needing a new furnace or rotten floor because these are items that would not be things that could get the government insurance.  So the properties that are insurable should need less work.

Hope that helps.