BiggerPockets

Hard for investors to buy. All the good ones get snapped up during the owner occupant bid period.

Shane, you buy HUDs if they make sense. I've been buying HUDs for over 8 years. Study the website, learn the formulas. View the properties, determine your price points and have at it.
As Jon mentioned, many are snapped up by owner occs and non-profs; some of the stinkers can turn out well, too.
My company has purchase over 50 HUDs per year for the past 4 years. We've done well. Our bid to award ratios remain strong; currently we get 2 out of every 3 we bid on.
Good luck.

Here is an example of a risk of buying a HUD house as an Investor.

You bid get the house under contract and get ready to close. Before closing, vandals strip the property of every appliance and do $10,000 damage on a house that is under contract for $29,000. Any other seller, you can cancel the contract. HUD will not let you cancel the contract if you are an Investor. They will if it was a owner-occupant.

The representative at HUD told me that once the Investor pays their earnest money there is no way they are going to get it back. I tried withholding the earnest money and throw it into dispute, but HUD sent my Principal Broker a certified letter that if we didn't send the earnest money, then the entire real estate office would lose HUD certification. So I sent the money to HUD and paid back our buyer his $500 out of my pocket.

Now I warn every buyer of this added risk of buying HUD properties.

My strategy to acquire HUD houses is as follows.

If it is on a daily bid then bid 8% below list price. If it is the first day of bidding, then you will have probably bid more than list to get. In my opinion the better deals are the properties that you can buy on a daily bid. Now this is for my market. Some markets never get a HUD to the investor bidding period.

Also here in Texas you have to use their title insurance company which is Goverment at it's best. Star Title in Houston is who they use, they are rude never on time and don't care about you either way,,,,, and on top of that if you want title insurance with HUD you pay for it, so when you are getting harassed and not helped by the title people, just think .... im paying for this :)

There are some good deals that pop up, just do all your homework.

HUD is good and bad, deals have become very marketed and therefore brokers have taken advantage of the idea of "forclousures" being a great deal even if they are not, so uneducated folks are buying not so good forclousures at inflated prices. The benefit to Hud is that they do a quick walk through the property for you so you can bid away with out haveing to go to the property, this is nice, also a few postings have mentioned that they have lost their earnest money, I too have lost my earnest money however after the fist time I learned my mistake and all you have to do to back out of a contract and get your money back is expose somehting they did not in thier walk through, this happened to me on my last hud deal, I found a water leak they did not mention stopped the deal and got my money back. HUD is a great back burner

Like any deal there are good/bad points.

What I don't like:
- It is the Government and they take FOREVER (at least in the markets I have bought). I had one take 6 months from EMD to close.
- OO do take a lot of the good deals - and frankly there are people who scam that system so it isn't a level playing field
- No one to talk to - whatever broker that handles them normally doesn't care about buyers becuase they have the gov. contract locked up - so no one to reach and very poor customer service

What I do like:
- $500 EMD. If your house is trashed I can walk away from $500. A Bank REO that requires 10 or 20% may be a different story (but I agree you can work out a deal if the home has been trashed....in most cases).
- You find out in a few hours if you got the deal
- The ones I have gotten I have gotten well below the normal discounts in the area

If you can get over the long close time - the poor customer service then a deal is a deal is a deal.

I have just learned to get over it and expect it to take a year to close and when it closes in 4 months I find myself plesantly surprised :)

One nice suprise I had on the latest HUD home was that the Lead report included a lot of exposed/flaking lead paint on the soffit and fasica and HUD paid 2K to have it all scrapped and primed. The one before that they paid to have termites treated. The two that I have bought have been for 80% and 85% of an already reduced asking price - 54% and 77% of original asking price.