Are HUD Homes the Right Investment for You?
When asked what types of homes I advise people to purchase for investment, one word always springs to mind: VALUE!
The word ‘value’ is so important because an investment property can be a good value at $100,000 or $10,000,000! It just depends on the home, its location, its condition, and the amenities. This is why the subject of HUD homes comes up so frequently.
First, a few clarifications. HUD stands for the Department of Housing and Urban Development. HUD homes for sale to investors are government-owned foreclosures. Since HUD oversees the FHA loan program, they become the entity that sells these properties. Some properties are in Revitalization Areas, which are eligible for discounted sales.
The loans that are defaulted on are held by banks, but the government insures them. So if a home forecloses, frequently HUD sells the property. I say frequently, because the banks have the first option to keep and sell the property, but if they pass, HUD has its own proprietary bidding system to sell the homes. These homes are often sold in bulk, so an investor needs to know some ins and outs before jumping in.
There is a strict order of who can bid on foreclosed properties. The owner-occupant has the first option, which goes to non-profits and government agencies. If a property becomes available to investors, it will become available five days or 15 days later, depending on whether the property is insured FHA.
HUD Home Store
The site to know is https://www.HudHomeStore.com. This is the listing site for HUD real estate owned (REO) single-family homes. It is a centralized listing site for searching all HUD properties. You can search by state, zip, city or address. If a home is sold, it will come off this site even if the ‘For Sale’ sign is still on the property. When you go to the site, you will see a period deadline informing you as the timeline for bids on this property. For investors, the critical thing to know is they can bid on the first day after the ‘period deadline.’
Actually, the most important thing for an investor to know is that Safe Harbor Real Estate Services and our expert Marie Pettie, are very adept at the HUD home process. We would love to help you discern whether this would be a good value for your portfolio. Our team has decades of experience in this space and can make the process smooth…and ultimately profitable.
Feel free to reach out to us! We’d love to talk about your unique situation.