hudhome investing

[Demarcus Lacy]

what are advantages of hudhomes? can they be used for rentals for a 1sttime investor, or a flip depending on neighborhood?

[Jay Orlauski]

A home becomes a HUD home when the borrower defaults on a FHA loan for a 1-4 unit residential property and it is repo'd by HUD. Once back in HUDs possession, it is assigned to an asset manager who secures the home, changes the locks and give a BPO. The home is listed at this price and is made available on the hudhomestore.com web site. Only HUD certified agents and brokers may submit offers and they must be submitted through the website.

There is typically a period of time in which only "owner-occupied" buyers may submit bids - if none are accepted by the final bidding day, the home then opens up to any and all buyers who have the ability to purchase the home. In many cases the home is financeable - in others it is not. The condition of the home determines the initial offering period - for example if the home is uninsurable and will not qualify for financing, they will give OO buyers 5 days to put in their bids and if none are accepted by then, it will open up to investors - whereas an insurable home would have a 30 day initial period where bidding is only open to OO buyer ( no funny business either - they are serious about really living in the house)

Also the during bidding process for insurable homes, for the first ten days no offers are looked at or accepted. On day 11 they will open all the offers at the same time and pick the one that nets them the highest amount. If no offers ar accepted than bids are reviewed daily as they are received. The first acceptable offer wins the bid, even if a better offer coms in 10 minutes later - its automated for fairness and efficiency.

oh yeah .. lenders will not loan more that the appraised price of HUD homes ( which is the listed price in the case of HUDs) and so any overbids must come out of the buyers pocket.

there is much more - but those are the bare basics of what a HUD home is -hudhomestore.com has the rest of the info if your interested - hope that helps