Re: flip, handyman, or neither - Posted by Tim (Atlanta)
Posted by Tim (Atlanta) on February 23, 1999 at 07:16:31:
You understand that the $2600 allowance only applies to owner occupants. If you do not intend on occupying the property, HUD will not give you the $2600. You didn’t mention the HUD list price, but I hope it is more than the $59,000 you are bidding. A quick rule of thumb on HUDs is to take the list price minus the repair allowance, multiply that number by .80, then add in the real estate commission (I use 3%). It is my understanding that this is the minimum that HUD will accept on a bid. If your bid is accepted, you will have to close on the property yourself. You cannot assign a HUD contract. Also, HUD has become rather nasty lately about keeping the earnest money deposits. Just because the buyer cannot secure financing is no longer a good enough reason for HUD to refund the earnest money.
Also, the profit margin seems pretty thin. Per your numbers : Purchase is 59,000, repairs of 7600, total cost to you of 66,600. If the property sells at 73,000, your profit would only be 6400. That’s pretty small for the amount of time and energy needed to do this.
Just my opinion.