Columbus HUD homes offer great potential for real estate investors and land lords. Unfortunately, there are not too many around. If you follow our blog you know that the number of HUD homes available to all bidders (investors) has shrunk considerably since the beginning of this year. Only 15% of all Columbus HUD homes listed each Friday are available to investors.
So what are the best strategies for investors to win one of the few remaining deals?
I want to offer you four tips to increase your chance of success when you are looking to buy a HUD home as an investor or landlord. Combined with the great information you find on this blog you will surely hit a winner!
Tip 1: Be Ready
You need to be prepared to submit an offer within 24 hours and act immediately, when a deal becomes available. Once the exclusive 10 or 5 day period for owner occupants is over, HUD will accept bids every single day. You can submit your offer in the afternoon and you will know the next morning, if you are the winner.
The best way to prepare for submitting offers quickly, is to have all your HUD documents signed and ready to go with your real estate agent. With active investors I usually have an earnest money check deposited with our brokerage and the contract documents pre-signed. You can simply call me and I will submit the offer for you before midnight. If you are the winning bidder, we can simply finish the paperwork and overnight it to HUD.
Less experienced agents often lose deals, because they did not submit the original paperwork to HUD within 48 hours of notification!
Tip 2: Focus on Re-Lists
As an investor your best chance to win a low ball offer is when you focus on properties that have been relisted. This means that a previous contract fell through and HUD has to start from scratch. With relists there is a 5 day exclusive for owner occupants, so investor can submit their bids on Wednesdays.
HUD is more motivated to sell relists to investors at a discount. If we notice that a property has been relisted a number of times we notify our customers. These are the best opportunities for investors, because occasionally HUD accepts discounts from the list price of 50% or more.
Tip 3: Look for HUD Homes that need Work
Owner occupants buy up all Columbus HUD homes that are listed as ”Insured” for FHA purposes. This simply means they don’t need any repairs. A large majority of HUD homes is listed as “Insured with Repair Escrow”. Again, owner occupants buy many of these homes, but when the repair escrow exceeds $5,000, these Columbus houses become more difficult to finance and most owner occupants don’t want to deal with them.
If you find a home that is “Uninsured” you should take a closer look. It is very likely that a owner occupant won’t get financing for this home. FHA requirements are pretty tough right now. It is best to make a cash offer when HUD notices that they can’t sell a home with FHA financing. We also see that the insured status of properties changes when they get relisted, because a buyer may have discovered problems during the inspection.
The disclosures for most HUD homes indicate that there is mold in the house. Do not automatically reject these homes. Inspect them before you make an offer to decide for yourself what level of mold remediation is necessary.
Tip 4: Bid on Wednesdays
I suggest you submit your offer on Wednesday. Why? Because the HUD homes that were relisted on the previous Friday are reserved for owner occupants for 5 days – until Tuesday midnight. These relists offer a great opportunity for real estate investors to get a lower offer accepted. You probably know that we call these homes boomerangs, because some of them have been coming back every month as one contract after the other falls through.
Here’s One Final Bonus Tip!
When you make an offer on a relisted home, do not offer more than the previously accepted bid. This may sound obvious, but you won’t believe how many buyers and agents submit offers that are substantially higher than previously accepted contracts.
Although HUD publishes bidding results, these numbers are no longer available on their website when a property is relisted. Except for our customers! We keep a database of HUD bidding statistics exclusively for our clients. If you work with us, you will know what HUD accepted previously, and we will submit an offer that is competitive, but not too high.
Call me at (614) 975-9650! I’d like to help you develop a customized bidding strategy to win all your HUD Home offers!
Thanks for reading our Columbus HUD Homes Blog
Posted by: Susanne Novak, ABR, FIS, GRI
Columbus Realtors specializing in
HUD Homes, Shortsales, Investment Real Estate