Flipping HUD homes? - Posted by Barb

Posted by Larry on September 09, 2003 at 13:01:48:

From my experience and tribulations HUD homes and REO’s you will need to do a double close because these institutions do not like to see money left on the table at closing… If you want to flip this property or any other property to another investor then you will need to do a double close only if the formula holds up.

Arv x 65% - repairs - c/c/cost - af = mao
a) Arv = after repaired value
b) Repairs ? use the evaluation sheet
c) c/c/cost = carrying and closing cost
d) af = assignment fee
e) mao = max. allowable offer

Remember to take into account double closing costs.

Best of luck to you


Flipping HUD homes? - Posted by Barb

Posted by Barb on September 09, 2003 at 12:25:10:

Hello there:

I may have a lead on a HUD home that a friend of mine, who originally intended to purchase, is now reconsidering. If he decides to withdraw his offer, I was thinking I might know a rehabber who might benefit from purchasing, rehabbing and reselling.

I haven’t read anything here about flipping HUD homes. Is this a possibility? I’ve only read about flipping homes from seller (who is a person, not an institution) to buyer. Obviously I’m pretty new to this business but any thoughts you may have would be appreciated. Particularly, if this scenario is possible, I was thinking of putting togehter an assigns contract and then bringing in a buyer. I am in Maryland, by the way. I will continue reading through the archives to learn what I can but also wanted to post this question.

Re: Flipping HUD homes? - Posted by Barb

Posted by Barb on September 09, 2003 at 14:26:32:

Hello Chefist and Larry:

Thanks very much for your insights! I have also read through the archives and learned more on this subject. Apparently while it is possible to flip HUD homes, as you Chefist, the real gems are few and far between, and HUD and other USG agencies are getting more cautious about dealing with investors in general due to fraudulent flipping deals. That’s really too bad. Still, after finding out more about this house, we’ll see if it’s a diamond or a lump of coal.



Re: Flipping HUD homes? - Posted by Chefist

Posted by Chefist on September 09, 2003 at 13:13:13:

Be careful of those HUD and VA repos…many are not that far below market value, and may need some work to fix up…in fact, if they do need work, they generally do not even give the person buying room for fix-up equity…in other words…FMV of $100K…needs $20K fix-up, they want $80K for the house…also, be careful that they do not put a clause requiring you to live in the house for a year(used to prevent investors from buying)…