HUD Homes, Still A Good Investment Today? - Posted by Mike Bergman

Posted by Jo on September 30, 2003 at 08:45:53:

Lyal,
I agree with you except I would describe Ocwen as next to impossible to deal with. Between the double talk and noone seeming to have any clue what is going on. To top it off, they don’t care.

HUD Homes, Still A Good Investment Today? - Posted by Mike Bergman

Posted by Mike Bergman on September 29, 2003 at 02:23:12:

In reference to this article: http://www.creonline.com/articles/art-009.html

Are HUD homes still a good place to get investment properties for 50% of their market value (after fix-ups)?

I don’t mind doing fix-ups at all, especially if I can make potentially tens of thousands of dollars profit on each house flipped. But I have been reading on the richdad.com forums and people say there is no good deals on HUD anymore, that they are saturated and the final bid price usually ends up only slightly lower so you can only make a few grand profit, hardly worth the effort to fix up the property.

I’m curious if this has been others experience as well or is there still plenty of good deals through HUD? If I am correct, that article I referred to above was written approx 1995/1996 (as it’s one of the first articles on this site and I believe the site started in 95).

Any insights? I’m curious if J. P. Vaughan even still does these deals today, if she is reading this I would love to hear what you have to say, or anyone else who may have some insight.

Thanks,

  • Mike

VA houses - The price almost doesn’t matter - Posted by Hank FL

Posted by Hank FL on September 29, 2003 at 13:57:49:

Sure, you’ll might be paying above the ask, but I think VA is still doing financing (at least through 2003) @ LOW intrest rates & LOW down payments.

What is it now ? Around 6%

Where are you going to get an investor loan at 6% ?

Total out of pocket on a 100k house would be around 5k-6k.

If you L/O the house, you will get most of that back in an option fee. The depreciation will take care of the rest.

Will a 100k house cashflow @ 6%

If you don’t mind guaranteeing debt, think about this cheap money.

You’re just going to have to not let paying a premium for the house bother you.

If you hold on to the house for 15 years or more, is it going to matter that you paid more than you “should have”.

Just a thought.

http://www.homeloans.va.gov/homes.htm

Re: HUD Homes, Still A Good Investment Today? - Posted by ScottM (OH)

Posted by ScottM (OH) on September 29, 2003 at 12:03:12:

Mike,

In my area, I’m able to locate properties at 65% ARV. ARVs are $90-95K. Bids are $60-65K. Typical rehab costs are $5-6K.

The keys for us have been…

a. Work directly with HUD’s website, which gives us a 1-day head-start on those who use other sources.

b. Negotiate reduced Realtor Commissions. The project goes to the highest NET bidder, so reduced costs here add directly to their bottom line. Our current Realtor charges a $1K flat-fee, which puts another $2K on the bottom line, when compared to the typical 5% many Realtors charge.

c. Be quick to react. Good deals go within 2-3 days, so it’s imperative to get an eye on the property as quickly as possible.

d. Learn HUD’s mgmt practices in your area…being able to know when a price-drop will come, knowing how much that drop might be, and knowing what % of that price HUD is likely to accept can give you a significant edge.

In any event, I haven’t seen any of those 50% FMV deals you’ve mentioned (unless the basement or some other structural defect needs $15K-20K of work), but 70% FMV is achievable in my area.

Hope that helps.

Regards,

ScottM (OH)

Re: HUD Homes, Still A Good Investment Today? - Posted by Rob FL

Posted by Rob FL on September 29, 2003 at 10:47:25:

You really have to pick through the lists heavily to find good deals, but that’s pretty much the same as anything else. I mean, if 10 motivated sellers call you probably only 2 or 3 are actually something to get look at, and how much marketing effort (both time and money) did it take to generate the 10 calls. Same with the HUD list, out of 30 or so listings that come up in my area every week only 2 or 3 are worth looking at. But at least the HUD list requires no marketing effort or money I my part.

I did buy a HUD property Friday. Decent neighborhood, decent house. Asking 74K. I bought it for 65K. 2 houses on the street are currently listed in the mid 90’s. House needs only 5 to 6K in repairs. Hopefully I will be in and out in 90 days with 10K in profit.

Re: HUD Homes, Still A Good Investment Today? - Posted by greg-rehabber

Posted by greg-rehabber on September 29, 2003 at 10:35:02:

I bought a HUD foreclosed house last year (2002)
(from a third party company that sells these repoed
homes for HUD after HUD forecloses).
Paid 77k for it- put in 22k (total costs=99k)
sold for 116k = 17 k profit.
There are still HUD deals out there, but getting harder
to find.

Re: HUD Homes, Still A Good Investment Today? - Posted by ken in sc

Posted by ken in sc on September 29, 2003 at 10:11:13:

With the abundance of new investors in the past few years, coupled with Realtors selling HUD houses to owner occupants as a “deal”, the HUD market has been a difficult place to find a good buy for real investors. Although I still occasionally see someone close a good deal through HUD, it is a needle in a haystack search to find one. I for one have quit looking there as the time involved in comparison with the return does not justify.

Ken

Re: VA houses - The price almost doesn’t matter - Posted by Jo

Posted by Jo on September 29, 2003 at 18:37:11:

Hank and others,
VA has just released their LAST group of homes to be sold by the VA. There is NO va financing, for at least last 6 months. Also on current listed homes from VA, if you don’t close by 12/31 they will cancel the deal.
The word is that VA foreclosures will be sold like HUD’s thru some BS company that doesn’t care about anything but keeping the contract.
Too bad because VA’s were the best deal in town when they would finance with only $1000 down. Of course all the greedy investors drove the prices into outer space. Just my opinion.

Re: VA houses - The price almost doesn’t matter - Posted by Lyal

Posted by Lyal on September 29, 2003 at 14:29:56:

Hank,
There is no more “vendee” financing from VA. Went away a few months ago when they started the process of outsourcing their REO operation to Ocwen.
Lyal

Re: HUD Homes, Still A Good Investment Today? - Posted by Jo

Posted by Jo on September 29, 2003 at 18:38:38:

Rob,
Did you buy as on owner/occupant or as an investor?

Do Repairs Rehabs Yourself Or Pay Others? - Posted by Mike Bergman

Posted by Mike Bergman on September 29, 2003 at 14:40:30:

Okay, an additiona question here, when you are able to find a house at about 70% FMV, do you generally do all the repairs yourself or do you hire either a friend or a local company to come in and do them. I understand the second might cost quite a bit extra but it also might save you a lot of time to go looking for more deals so it’s kind of a trade off, I’m wondering what a lot of you do, can you still make a decent profit when you hire a repair/contracting company?

The last post (greg-rehabber) mentioned repair costs of 22k, which I think is quite a bit of repair for a house that was 77k. So that’s what’s making me ask this question, I’d love to get into this but don’t necessarily want to spend my own time to fix up properties. I would if necessary but would perfer not.

Re: VA houses - The price almost doesn’t matter - Posted by kgreen

Posted by kgreen on September 29, 2003 at 16:02:00:

Are you saying that Ocwen will be handling VA foreclosures from now on?

Too bad… - Posted by Hank FL

Posted by Hank FL on September 29, 2003 at 14:43:48:

Before I posted I wasn’t sure so I went to the website and gave it a look-see.

http://www.vahomes.org/sp/announce.htm

It says there that VA is doing financing untill Jan 31 2003, no?

You’re saying that the days of VA financing are currently kaput ?

I don’t know, I was overseas for the first half of the year and haven’t talked to anyone about VAs since I’ve been back.

Re: HUD Homes, Still A Good Investment Today? - Posted by Rob FL

Posted by Rob FL on September 29, 2003 at 20:52:02:

Investor. I never bid owner occupant on any of them.

Re: Do Repairs Rehabs Yourself Or Pay Others? - Posted by greg_rehabber

Posted by greg_rehabber on October 02, 2003 at 20:21:22:

I used to do alot more myself, but nowadays
I’ll do fairly easy stuff- paint, clean up, maybe
minor stuff (hang a light, change locks/doorknobs).
Most of the heavy stuff I hire out to handymen.

Re: VA houses - The price almost doesn’t matter - Posted by Lyal

Posted by Lyal on September 29, 2003 at 18:27:54:

Yep, that’s the rumor.
Lyal

Re: Too bad… - Posted by Nate(DC)

Posted by Nate(DC) on September 29, 2003 at 19:52:46:

That is correct…through January 31, 2003…a date which is nine months in the past!

NT

Re: who is ocwen? - Posted by Drew

Posted by Drew on September 30, 2003 at 24:33:24:

For a newbie, who is OCWEN?

Re: VA houses - The price almost doesn’t matter - Posted by Nate(DC)

Posted by Nate(DC) on September 29, 2003 at 19:52:20:

It has been confirmed, at least by the DC area local office.

NT

Dyslexia - Posted by Hank FL

Posted by Hank FL on September 29, 2003 at 21:42:39:

Or is it ADD ?

Perhaps an STD (Suddenly Tremendously Dumb) ?

Nah, I think it was just a case of good old-fashoned brain flatulence.

No more of those nifty VA investor loans.

Is this a Republican “smaller government” thing ?