Basics of Property Management: Screening Potential Tenants
3 Tips For Purchasing A HUD Home
Jesse Obrien
The HUD housing program is a program that is run by the U.S. Department of Housing and Urban Development. If you find a HUD home on the market, the government owns the home due to the foreclosure on an FHA loan. These homes are usually sold at a great discount and require a slightly different approach to buying.
Be Ready to Make a Quick Move
A HUD home is usually priced below or at market value. For those who are interested in flipping a house, HUD homes are extremely popular. Many people who want to flip a home know how to move quickly on HUD homes.
The thing is, during the first thirty days a HUD home is on the market, no bids from real estate investors can be accepted on the home; only bids from individuals who actually want to fix up and live in the home as their primary residence are accepted. When a HUD home first hits the market, you need to be ready to move and make an offer before real estate investors can make an offer on the home.
Secure Financing
Second, you need to secure financing for the home. You are going to want to make sure that you get pre-approved for a loan. This will allow you to put in an offer on the home quickly. You need to make sure you let your lender know that you are interested in purchasing a HUD home. Purchasing a HUD home often requires a specific lender. You are going to want to share that information with the lender.
Examine the Home Closely
HUD homes are generally sold as-is. That means that no one is going to fix up the home and improve the home. You need to be aware of what you are getting into. Have a home inspector go over the home, even though the seller, the government, will not be making any improvements to the property.
That way, you will have a solid idea of what you will have to invest in improving the property to get it up to a higher quality standard. You might also want to have a contractor look at the home and give you some quotes for fixing up the house. Not all HUD homes will require that much work, but some will.
When it comes to purchasing a HUD home, you need to be ready to move quickly within the first thirty days of the listing before real estate investors can make a move on the property. You are going to want to get pre-approved to purchase a HUD home from a lender. You will want to examine the home closely and make sure you are aware of what the home will need to fix it up.
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For the last several years, I've used a property management firm to help with my rental properties. One of the tasks that they handle for me is screening applicants who would like to move into one of my vacant units. Their expertise has helped me lower my tenant turnover and find people who want to stay with me for years. Part of the process is a tenant screening credit check. Before any further contact takes place, my manager orders credit reports from at least two agencies. That is enough to tell us if an applicant is a good financial risk. Assuming the references work out, I meet the candidate and make the final decision. If you own rental properties, let me tell you more about the benefits of having a property manager. I'm betting you'll find this type of arrangement will work for you too.