NJ Investment Properties 101, Part 6: Investing in a HUD Home

As we discussed in a previous entry, a HUD home may or may not be the right fit for your NJ real estate investment. HUD gives priority to owner-occupant purchasers. However, it there is no acceptable bid during the priority period, unsold properties are then available to all buyers, including investors. Your NJ Realtor will have the necessary details.

There are a couple of ways to find out what HUD homes are available in your area. You can visit the HUD website online, or a better way is to find a participating NJ real estate agent. He or she will know what is for sale under the HUD guidelines. Moreover, your NJ real estate agent must submit your bid for you. HUD generally does not accept bids directly from buyers.

When you make an offer, your NJ real estate agent will help you with any paperwork. The settlement date (if your offer is accepted), will normally be within 30-60 days. You need to arrange financing and close the sale within that time frame, or forfeit your money deposit. You may also be able to pay for an extension of your sales contract). The selling agent’s commission will be paid by HUD, but only if you, the investor, makes this a condition of your offer.

Of course, when buying HUD homes, you have to analyze them like any other investment. If it will be a rental, you have to do the math to see if you’ll have positive cash flow. If you plan to fix it up and sell it, be sure there is a profit after all the expected and some unexpected costs. Just because it’s a HUD home doesn’t mean it’s a steal.

Learn more about investment homes by contacting Dan Kurland at dkurland@weichert.com or call any time at (732) 233-6969.

To check out other articles in the NJ Investment Properties 101 series, click on any of the below links!

NJ Investment Properties 101, Part 1: Know Your Time

NJ Investment Properties 101, Part 2: You ARE Your Network

NJ Investment Properties 101, Part 3: Financing

NJ Investment Properties 101, Part 4: Achieving The Right Price

NJ Investment Properties 101, Part 5: Know Your HUD

NJ Investment Properties 101, Part 6: Investing in a HUD Home