Investing in a HUD Foreclosure

[James Patrick McCarthy]

Investment Info:

Single-family residence buy & hold investment in Lagrange.

Purchase price: $65,000
Cash invested: $5,000

I bought a HUD foreclosure on a sealed bid and won the bid.
Had the utilities turned on and water ran down the driveway and into the street.
Needless to say, I had some rehabbing to do.
I have it rented through a management company.
Very passive investment now, not so much at the beginning.

What made you interested in investing in this type of deal?

I had a little money left from the sale of my primary residence and I wanted to invest it so I wouldn’t spend it.
Initially, I wanted to buy, rehab and flip it. Just a month or two after I bought it though, the real estate market tanked and I was left holding it.
Probably a Blessing in disguise though, it stays rented and I only owe 5 more years on the 15 year mortgage.

How did you find this deal and how did you negotiate it?

I found this deal through my local HUD specialist.

How did you finance this deal?

I borrowed money from a local bank.

How did you add value to the deal?

I rehabbed the property, from roof, to flooring.

What was the outcome?

I still have it and one more similar single family house, they are both rented.

Lessons learned? Challenges?

Finding my own way through the borrowing process.
Rehabbing the property to flip but then having the conditions change. I had to adapt to the new situation and venture in to something I wasn’t actually wanting to do.

Did you work with any real estate professionals (agents, lenders, etc.) that you'd recommend to others?

No