Investing in Hud Properties: Real Estate for Less

HUD properties are one of the best investment opportunities available in today's real estate market. Savvy homebuyers who have their hands on the right property listings know that they can purchase HUD homes significantly below their market value and make a windfall when they sell them at a higher market value just a few months or years later.

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The Learning Process

How can you get into the market? First, you need to familiarize yourself with a few acronyms. The United States Department of Housing and Urban Development (HUD) and the Federal Housing Administration (FHA) provide low-income individuals and families with insured mortgages to help them buy homes that they would otherwise be unable to afford. Sometimes, however, these people are unable to meet their mortgage payments and are forced to default on their loans. When that happens, FHA reimburses the lender for its expenses and HUD becomes the new property owner, charged with disposing of the property, preferably as quickly as possible.

How it Works

Selling the properties becomes the responsibility of the HUD Property Disposition Department. Sometimes the properties are sold through a broker, who receives a 6% sales commission. Other times, the are sold directly to the public. When that happens, investment opportunities abound, because these properties often sell way below their market value.

Strategies for Getting the Best Value

Inspecting the property before you buy it is critical, because the homes are sold "as is". Some are new, luxurious properties, but others require minor repairs and still others demand extensive remodeling. It's always best to know these things before you buy!

Also, you need to be intimately familiar with the terms of the contract. HUD restricts some sales as being "owner-occupant" only, meaning that you need to live in the home for at least one year after buying it. In addition, bidding on a HUD foreclosure property usually requires submitting a 5% deposit along with your completed bid package (if the bid is chosen but the bidder does not follow though, he or she loses the deposit). And, since you're dealing with the government, you can expect to see many unusual contract provisions, such as a notice declaring HUD to be innocent of any illness caused by the property, such as exposure to lead paint.

Getting the Right Information

Taking advantage of these opportunities requires knowing where to look and understanding the ins and outs of purchasing these types of homes. ForeclosureDeals.com can help on both counts. First, we are the industry leader in providing lists of more than 1.5 million home foreclosures nationwide, and those lists are updated daily to give you access to the latest information. Second, our friendly and professional experts are standing by 24/7 to answer your questions and give you the guidance and advice that you need.

What are you waiting for? Enter the market for HUD foreclosure properties today by signing up for your seven-day trial membership on ForeclosureDeals.com.