FLIPPING WITH HUD PROPERTY
hi,
I have a property that I want to buy to flip. it is worth 140-145k when fixed. The house is 5 years old and all major systems are fine. It's going to be a HUD but only needs cosmetics such as carpeting and paint. I'm going to offer 100k or a little less and I've got a lender for the short term. How should I go about flipping it once I purchase it?
I think your interchanging terms here. If you are trying to purchase the house from hud and paint and put in carpets and resell. That might work. You might not make as big of a profit as you hoped. Plus you must be careful of seasoning. If you buy it, fix it. and try to sell it in less than a year, your buyer might not be able to purchase using a VA or a FHA loan. I buy huds and Va, fix em up and rent them out. I may sell some after I have had them a year or so.
You're probably correct about interchanging terms. What I want to do is just get this property from them and not have to keep it but sell it to another investor. Can I do that?
Two problems: One major, one minor.
Major: I hope that you are bidding on this home as an investor and not representing that you are going to be an owner-occupant and agreeing to occupy this home for one year. If not, you've committed fraud and could have big problems. Can you say, "Club Fed"??? A lot of people wink at this, but I like to sleep and night.
Minor: FHA recently instituded an "anti-flipping" policy. Check with a mortgage company for details. Essentially, no elgibilit;y for FHA mortgage during the first 90 days of ownership. The good news is that it could still be sold via FNMA. if your buyer can qualify.
Make sure that you do your homework.: Costs to purchase+financing charges when purchasing + repair/ redecorating+
all holding costs & expenses + selling expenses.
Hi,
Yes I would be placing a bid as an investor not as an owner-occupant. This house has not hit the HUD market yet. I'm wondering if this property is still in the foreclosure process. Any way to find out? Also, I estimate the cost for acquisition at about 98k and the repair costs about 2k. I'm not sure about holding costs as I don't know what the interest rate would be and if I can get payments put on the "backend" of the loan.
Hey unfortunetly for you as an investor. Hud gives the first 5 days to owner occupant bidders. If no owner occupant bids come in that are acceptable it is opened up to all bidders. Here is a hint. Hud pays 5% commission to real estate agents by default. If you found the house. Tell the agent that you know what you want and your found the house yourself. Therefor you are only gonna give him 2%. Thats what i do. Ive bought 2 houses this way. Realtor is happy cause all he does is submit bid and come to closing for check. Im happy cuase i save 3 grand.
DAve