home inspections/hud homes

[Tony G]

I read a lot of articles that give advice on the importance of getting a home inspection done before buying a property. My question is what if I want to buy a HUD home which doesn't allow home inspections? Usually, are HUD homes harder to acquire than foreclosures? What are advantages and drawbacks in acquiring HUD properties?

[Rob K.]

Kerry M.

The $4,000 from HUD for lead paint is only for owner occupants. If you are buying as an investor, you are buying as-is. They want you to inspect before making the offer.

I buy a lot of HUD homes. HUD does an inspection called a PCR (property condition report). It is pretty useless, but they test the plumbing lines for leaks, etc. Most of the HUD homes are so cheap that I just buy them and roll the dice. If it turns out that I need a furnace, that's only $1,200 -$1,500. If there is a plumbing problem, that is usually a cheap fix. Roofs are expensive, but you can usually tell by looking at it if it is ok. The only time I got burned was in 2009, I bought a HUD house for $10,000 that was built in 1999. The roof was covered in snow, but I figured a 10 year old roof should be ok. Turns out the roof was hit. $2,400 to replace. Of well. The rest of the house just needed a paint job and has been rented since for $725. Thise are the kind of numbers I like.

One thing I would recommend: HUD doesn't provide title insurance. They say that they are giving you a clear title. After all the robo-signing came to light, I make sure I purchase title insurance. I don't trust the government and I believe in CYA (cover your assets.)