You need to know what you want to do with a house before you buy. More importantly, you need to make sure you’re buying the best properties. That means only making offers on those houses which fit your criteria. You might choose to make offers on every HUD home that meets certain criteria…so what are yours?
You could tell an agent to make an offer on everything that is under a certain price (such as the median price range in your area) following your formula for making offers and plugging in their best guess of the properties “as-is” value and repair estimate.
For the most part, you’ll narrow down your search to the ones with the right number of bedrooms, bathrooms, square feet, desirable geographical areas, and have been on the market thirty days or more.
Don’t worry about it if the house needs a lot of repairs. Those costs don’t necessarily hit your wallet if you play your cards right. You can always wholesale it to another investor who can handle the improvements and big rehabs with no problems.
There is a term called “sweat equity,” which refers to labor costs on fixing up a home. With any home you buy into, a little extra work on your part may be a great way to build some equity by doing some of the work yourself, but it depends on how much your time is worth to you.
From here, you can make offers on all of them that you want to, or just the ones showing additional signs of motivation (like price reductions, having a lot of repairs, long number of days on the market, etc.). Or, you could just focus on the best deals first and then get around to the rest later, if you have time. It’s up to you!
The better you are at scanning, the fewer properties you will need to investigate further—unless your plan is to make an offer on everything. This is often the case if you live in a rural area or where there are not a lot of new HUD homes each month.
In small towns and rural markets, you can also try expanding your geographical search area. Perhaps there is a larger market or city an hour or two away from you. You can still find deals there and can wholesale them to other investors without having to drive there and look at every property.
Most of the investors who buy properties from me do not live in the same state, much less the same city. So don’t think that just because you may not have any investor buyers in an area that you can’t sell the property. With the age of the internet, many buyers purchase properties that they will never see. These are just a few of the criteria you can use to find great HUD properties that are available at a deep discount. You can find even more suggestions in my book, HUD Homes Half Off!
AUTHOR’S BOX: Larry Goins is an author, trainer and national speaker. He has written several books on real estate investing that are available wherever books are sold. He is making his latest book HUD Homes Half Off! available for free for a limited time at the following special website: www.FreeHUDBook.com