HUD Homes

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HUD Homes

Ever since the housing bubble burst in 2007, the Department of Housing and Urban Development, or HUD, has had to deal with an overflow of foreclosures and repossessions. This means that these HUD homes are going at rates that haven’t been seen in decades. While the economy is slowing down, the market for HUD homes is growing because of the enormous supply of foreclosures HUD and the banks are trying to get rid of.

Loose Banks Are To Blame

First let’s take a look at the events that got us here in the first place. Over the last two decades, banks were getting looser and looser with their lending, spurring people to take on loans and mortgages that they had no chance of seeing through to the end. As long as the economy was growing and credit was abundant, there was no problem. But as we all know, economies don’t grow forever, and as the bubble grew bigger and bigger, eventually in 2007 it burst.

A Homeowners Nightmare – An Investors Dream

As a result of this, people began defaulting on their mortgages en masse. Faced with foreclosure, they are forced to either cut their losses and sell their equity at a fraction of its cost, or turn the house back over to the bank. Either way, the house eventually lands back on the market, usually at a bargain. Then investors like us buy up these HUD homes and relist them at market value.

It Used To Be A Secret

Here’s the incredible thing: when we were doing this fifteen years ago, there was no internet, not nearly as many foreclosures, and the market was generally reserved for real estate insiders and investors “in the know.” Lists of HUD homes were guarded like trade secrets, since they were in fact such an easy way to turn a large profit. You’re essentially buying from people who have to sell now and have very little ground to negotiate on, or banks that just want to get rid of the properties and recover some liquid assets.

The Secret Is Out!

Nowadays, everything has changed. Foreclosures to choose from are abundant, and dozens of lists of HUD homes have popped up all over the internet. No longer is the foreclosure market one comprised of insiders and gurus, but rather it has become one of the easiest ways for newcomers to get their feet wet in real estate. With a little knowledge about the market, it is relatively easy to perform a “double close” which means you have a buyer lined up for a property before you have taken it off the market. Doing this essentially means that zero credit or investment is needed on your part, and you still get to pocket the difference.

Which Should You Choose?

Most lists of foreclosures and HUD homes on the internet today are subscription-based lists; that is you’ll have to pay a small monthly fee to access their “leads.” However, just closing just one deal often makes the cost of subscription negligible. Recently I have been having greatest success with RealtyTrac; they list is enormous and the details on their properties are very thorough. They offer a free trial, so sign up and give it a shot—you have zero to lose and could potentially gain a very lucrative new career path!
Photo By Casey Marshall