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HUD Homes

(An excerpt from 69 Ways To Make Money In Real Estate)

By - 2005

Advantages:

You can sometimes find cheap properties this way.

Disadvantages:

These homes are sold "as is," and you may be competing against many experienced investors.

The hype is that you can buy houses that the government has repossessed for pennies on the dollar. Don't count on it. They may go cheap, but they sell cheap for a reason.

HUD homes are homes that are sold by the U.S. Department of Housing and Urban Development. They are homes that have been foreclosed on by HUD. They are normally sold through regular real estate brokerages. The intent is to get full market value for these properties, and they sometimes do just that.

Buying HUD homes isn't a way to "get rich quick." On the other hand, although these homes are supposed to be sold at market value, you may still find some profit opportunities here. This is because they are sold "as is," and often have enough problems to scare away most home buyers. For an investor who is willing to fix a few things, such scary houses present an opportunity.

Learn little bit about the process before you jump into it. You may have to take some risks here. If the water is off, for example, HUD will not pay to have it turned on just so you can be sure the plumbing works. They might let you pay to do that. Other wise, you may have to assume the worst and adjust your offer accordingly. These are truly "as-is" sales.

Run the numbers beforehand, so you are certain there is some profit potential. Then run them again assuming the worst about uncertain problems, like not knowing if there are electrical issues because the power is off. Be sure you can at least break even in this second scenario.

Often there will be just one or a few real estate agents in an area that handle all the HUD homes, depending on the size of the city. Getting to know these agents will give you a "heads up" on houses soon to be listed. A friend of mine bought many HUD homes as part of his "fixer upper" purchases. He always discovered unknown problems, but he also always made a profit on these homes.


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Houses Under Fifty Thousand | HUD Homes