Wholesaling HUD properties.

[richboysinvest]

Is this possible??

Hi you guys! 

Is anyone experienced in wholesaling HUD properties?  If so, are the contracts assignable?  or do you have to double close?  If a double close is necessary, do they dictate the Title company used?

Thanks in advance!!

[LoriK]

HUDs are not assignable.

[kdhastedt]

As Lori says, HUDs are not assignable.  In addition, several of the government/quasi-government programs are putting rules in place to prevent 'flipping' in less than a certain length of time (like 90 days)...

Keith

[richboysinvest]

Thanks you guys for your responses!  They really help!

I've read quite a bit on the HUD website about buying HUD properties. I have not run across any info on whether there is a time frame that an investor must keep the property before reselling. If I found a good wholesale deal, would it be possible to close on the deal with hard money, then turn around and resell right away? 

Also, HUD's 203k program sounds like a great way to get into my first OO fixer home. Maybe if I found a great deal on a three or fourplex, occupied one unit, and rented the others. Does anyone have any experience with this program? I understand that in order to go this route, the home has to be occupied by the buyer for one year.

Thanks again!! 

[LoriK]

Thanks you guys for your responses!  They really help!

I've read quite a bit on the HUD website about buying HUD properties. I have not run across any info on whether there is a time frame that an investor must keep the property before reselling. If I found a good wholesale deal, would it be possible to close on the deal with hard money, then turn around and resell right away? 

You will run into the seasoning issue. I am not sure how long it is with HUD properties, but I am pretty sure it is at least 90 days you have to hold the property.
When you submit offers on REOs or HUDs, the lender will have their own contract to submit with the offer, it isn't the stand real estate contract. There will be a bunch of addendums, and the seasoning clause will be in there.

[ericmedem]

I cant speak from anything that I have read, but I have wholesaled HUD homes, I have also done back to back closings with HUD homes, I also know of a decent way to assign HUD homes.  I don't know what the rules are, but I do know what I have done. I have 3 homes in my inventory right now that were HUDs,

[eman82]

ERIC   i have a question for you, so it is possible to do a double closing same day on hud homes??.

[richboysinvest]

I also know of a decent way to assign HUD homes. 

Eric or any others, can you give insight on how this is done??

[LoriK]

From HUD - (bolding mine)

Your agent will get the buyer's SSN and signature on the HUD-9548 Sales Contract before placing the bid electronically. The same name and SSN must be used on the bid screen. If there is more than one person buying the property together, your agent will use the name and SSN on the bid screen of the person whose financial statement is best from the lender's perspective, adding the other names and SSNs on the contract following the first one. Everyone who is buying and taking title to the property signs the contract and addenda. These bids and contracts are not assignable to anyone else. NOTE: Be sure to sign your name exactly the same way each time on all documents. The names and signatures must match the SSN given for that person.You must include the exact name as it appears on the social security card, including middle initial or middle name.

[richboysinvest]

Thanks Lori!!

[LoriK]

Thanks Lori!!

You're welcome. I just don't want to see anyone playing against the rules and hoping not to get caught.

[ericmedem]

I guess I must have been mistaken, at all of the closings that I have been to including my own.  I guess you must be right, thank you.  I have alot of learning to do on these hud thingamabobs LOL.

[housebroken]

richboy,
To answer the second question, each state has a HUD closing agent (Title Company or Attorney) that must be at the closing.  It is absolutely possible to wholesale a HUD property.  Since these contracts are not assignable, as Lori points out, a simultanious or back to back close is used.  As we speak, the only timelines of any significance relate to individuals purchasing your home using FHA financing and owner occ buyers who purchased a HUD and looking to buy another.   There has been serious discussion on holding periods involving HUD properties.  I'm personally not aware of a change in policy.  I have purchased 2 HUDs in the last 90 days and did not see or sign a document that would affect a sale of the property.  Ok, back to the transaction.  You're buyer #1, wholesaling to buyer #2.  Buyer 2's financing determines how you structure the transaction.  If buyer 2 is paying cash or using hard money, I would use a simult. close.  By the way, I always use my own title company even though we close in HUDs closing agent's office.  It is critical that your closing agent understands and is comfortable with the simult. close.  Not all are.  If not, do back to back.  Here's where it gets complicated.  If buyer 2 is using conventional financing, it becomes much more difficult for buyer 2 to pay your fee.  Title seasoning requirements by #2's lender will limit their loan.  If buyer 2 doesn't have the cash to pay you, you're SOL.  I personally only wholesale HUDs to my cash or hard money buyers.  Way fewer headaches.  The only other issue of great significance is who pays the earnest money.  I have buyer #2 pay it.  I have only had one bad experience with handling the earnest money like this.  It's a great story, but maybe another time.

Be careful, these are somewhat complicated transactions.
Keep your eyes open.
-h

[richboysinvest]

Great info, H!