In today’s economy, foreclosures are the best real estate investment. However, there are many types of foreclosures that a real estate investor can invest in. HUD homes are considered by many to be the best foreclosures to invest in.
A HUD home is one that has been defaulted on an FHA-insured loan and has been turned over to the Department of Housing and Urban Development (HUD) for disposal.
HUD has no interest in keeping real estate and is often willing to accept an offer much less than the fair market price of the property.
There are numerous websites on the Internet that will sell you a list of HUD properties. They provide the address, the amount of the mortgage owed and many are updated daily. Even better than this, you can get a listing from a HUD licensed real estate agent to sell the property. HUD pays any commission generated by a sale in this way.
After you get the list and select a property that you are considering, it is important that you view the property. Make a note of things that need to be repaired, as the house will be sold as is. If you are really interested in the house, you will probably want to have it inspected so there are no surprises later on.
After viewing and inspecting, you are ready to bid. Make an offer to HUD on the property. You should be aware that these properties generally sell for much less than the mortgage on the property.
If your offer is not accepted and you think it is worth it, make a second higher offer. If this is accepted, pay HUD in the manner you have agreed, either in cash or through a mortgage that you hopefully have agreed to previously. If the mortgage is not pre-arranged, make the purchase conditional on obtaining a suitable mortgage.
After closing, if you’ve done your homework right, you should have a home that’s worth a lot more than what you paid for it. You can make the repairs and rent it, live in it, or sell it for a profit.
If you are reselling the home, you may want to consider buying another HUD property and going through the same process. This is a great way to increase your net worth.