Memphis Area HUD Bid - First Time BRRR

[Jonathan Vest]

Hi BiggerPockets,

I'm considering the purchase of a small 1,200 sqft home in the Memphis area on a HUD auction. I've done my numbers on the property and believe I could make this work as a BRRRR.

The foreclosure ask price is $70k. I have estimated repairs to be around 6-8k (calling them $10k just to be safe) - so all in 80k. I think I could then get it appraised for 100k at the very least. Homes in the area are comping around 100-105k.

That means I can pull 75k out in my refi. Which leaves 5k in the deal, but cash flows (more than) $2,400 a year — ~50% ROI.

Here's the problem. There are tons of interested investors that are viewing the property. I know that many HUD bidders will ask for 89-90% of the ask - but I'm afraid this will go for a significant amount above the $70k.

For me, I think this project only really works if I can get it for $70k or less. Any advice for a first time HUD bidder? Should I just bid the $70k and move on? Any nuances I should be aware of?

Thanks so much in advance. You guys rock!

Jonathan