Investors with an interest in US property have probably heard of HUD homes, but what are they and how can they benefit your own portfolio? In this article we look at the characteristics of HUD homes and how, as Select Realty Online investor, you can use them to your advantage.
What is a HUD home?
HUD is an acronym for the United States of Housing and Urban Development. This is a federal agency which reports directly to the President of the United States. Within HUD stands the Federal Housing Administration (FHA), a department which promotes home ownership in various ways, including providing loan guarantees to private lenders for making low down payment FHA loans to homebuyers.
How does it work?
The system is set out like this:
• HUD wants Americans to be able to purchase homes.
• FHA sets guidelines for what qualifications a buyer must have.
• Banks qualify homebuyers based on their criteria and give mortgage loans to homebuyers.
• FHA insures these mortgages, promising to pay back the lender if the homeowner ends up in foreclosure.
• Banks then see the FHA guaranteed loans as low risk and make the loans directly to homeowners.
However, if the homeowners are unable to make their mortgage payments the bank forecloses, cashes in on the FHA insurance guarantee and gives the house back to HUD. Like a lender, HUD does not want to own a real estate portfolio of foreclosed homes, so is keen to sell them on.
What can it do for me?
So, as an investor, when you buy a HUD home, you are purchasing a foreclosure. This means you get a cheaper purchase price, BUT HUD homes are sold ‘as is’. So, it is crucial you know exactly what you are doing to safeguard against buying a house in a state of disrepair and/or with liens (bad debts) attached to it. This is where Select Realty Online comes in, as our strategic US partners understand the US foreclosure market and ensure all property we offer and deliver is clean of title/liens and refurbished to a high standard. This is not the whole picture. When a HUD owned property is offered on the market it comes with a set of rules, set by the American government, about who can buy, when and how. This restricts investor access to HUD properties except in special situations which Select Realty Online understands and can help investors benefit from.
Where can I buy HUD homes through Select Realty Online?
Our primary US location to benefit from HUD homes is Memphis, where you can buy fully-refurbished houses from just $25,000 to $29,000. How? Through our exclusive bulk wholesale investment package which enables you to:
• Benefit from 20% net pa guaranteed income for two years.
• Potentially achieve up to 140% profit in, typically, three years.
• Work with highly-experienced US partners who know the market inside out.
• Participate in the bulk wholesale market with packages from just four properties (usually not available on packages of less than 100 properties!)
• Invest in carefully-selected neighbourhoods where growth and demand are strong.
• Enjoy a fully-managed US property investment.