Posted by Michael Murray on February 21, 1999 at 21:27:35:
Well, that disposes of that question, doesn’t it?
Thanks,
Michael
Your Opinion: VA, HUD Strategy? - Posted by Stacy (AZ)
Posted by Stacy (AZ) on February 20, 1999 at 19:43:58:
OK, I admit I’ve read about VA and HUD sales and some of the good deals that can be had, but never really paid much attention to them. It seemed that the competition would be too stiff to be able to get a good deal, with every rehabber in the area and all the retail buyers trying for the same properties. But now I’m trying to expand my methods, and am considering these sources.
So, I though to myself, to increase my odds for winning bids, I could set aside $5K to $10K to use in submitting bids. Since every bid requires a $1000 deposit, I could use this pool of “bid-money” to continually circulate low-ball bids. If I ever was lucky enough to win more than one bid, I could decide if I could handle more than one property at once, and if not, simply keep the best property and let the others go back on the auction block. I don’t think there’s a penalty for declining a property if you win a bid, but I’ll check…anyone know for sure?
What do you think of this strategy? My bet is that I’m not the first that ever thought of this, but who knows. Just seems like a good way to increase your odds for getting a low-ball offer accepted. You opinions are welcome.
Re: HUD Success - Posted by Kevin OK
Posted by Kevin OK on February 21, 1999 at 22:14:47:
My sister had bid on a HUD ppty, and after the results came out, she had failed to win. To stay on top of her knowledge of local values she had her Broker check to see what the winning bid was, and SURPRISE…it was a cash bid lower than hers, which had also been cash.
After discussing this with the broker, she had the broker get back in touch with HUD’s local office (where she lives) to ask: Hey…what’s the deal? To which the local HUD official replied: "Oh s**t !!! They quietly admitted their mistake, and then to avoid further difficulty allowed my sis to pick another home of similar location and price range, and let her have the home prior to open market bidding…at $15,000 under market value, with financing provided! Total fixup costs were less than $800. It is now rented with cash flow, and the tenant wants to buy it on a wraparound.
Great deal…just because she was out trying.
Kevin OK
Re: Your Opinion: VA, HUD Strategy? - Posted by Irwin
Posted by Irwin on February 20, 1999 at 20:46:30:
If AZ is similar to other HUD offices, you have to bid through a broker who holds the earnest money. (Our earnest money is only $500.) You will be warned several times that if you are the successful bidder and fail to close, your earnest money will not be returned, so your proposed strategy could cost you a lot of money. It can also get your broker in trouble if his buyers do it too often, so I’m told. I do see houses get sold and frequently they come back through the sale again. I just bought one last week that I missed getting in two previous HUD sales. I guess three’s a charm.
Don’t assume that the “pros” are on top of everything and the little guy can’t win a bid. The pros tend to low ball everything, so if you’re not too greedy, you have a good chance. Just get out an do your homework. Know what values are in the areas you’re bidding in.
There’s a technique that I don’t want to discuss here, but it involves becoming really good friends with a broker, who can trust you not to get him/her in trouble by loaning you a key so they don’t have to actually accompany you to each house you go to look at - or something like that, so I heard, if you know what I mean.
The difficulty with HUDs is that you need cash to close, so find a friendly banker private or otherwise.
You buy for cash and sell on short term lease option to people with decent credit. they get mortgaged in a year and you come out. Or if you’re in them right, you can usually find someone to flip to, but I hate to give away all that profit, so I don’t.
Notice, I haven’t said a thing about buying VAs. Can’t. Never have. VA (at least for now) does the rehab and prices them at fmv. They also carry the paper for qualified buyers with about 3% down. That makes it almost impossible to get a deal as an investor.
Sorry I went on so long. Good Luck!
Re: Your Opinion: VA, HUD Strategy? - Posted by Carol
Posted by Carol on February 21, 1999 at 08:07:35:
Don’t discount VA so fast. Around here they DO NOT do the rehab, and there are some decent deals to be had.
Check with a local broker who TRULY specializes in VA (and/or HUD) properties… ask them how many bids they have won this year, last month, whatever… depending on the size of your market.
We have picked up several HUDs and at least one VA. The VA financing is nice because it is assumable. On the HUD we either had to go cash or get other financing as investors.
As with anything else, check out your local situation with some folks who know what they are talking about.
BTW, a good broker can pretty much indicate to you what level of bid will be acceptable for HUD - I’m not as familiar with VA.
Rgds,
Carol
Re: Your Opinion: VA, HUD Strategy? What about 203k? - Posted by Michael Murray
Posted by Michael Murray on February 21, 1999 at 14:57:14:
Has anyone in this discussion ever worked with the HUD 203k program? Is it a good deal?
Thanks,
Michael
Re: Your Opinion: VA, HUD Strategy? What about 203k? - Posted by Irwin
Posted by Irwin on February 21, 1999 at 19:41:17:
There is no longer a 203K program for investors. You can use the program only if you are an owner occupant.