I didn't know where to put this, so I apologize if it should be in another forum. Does anyone have experience buying HUD homes? I'm looking at a HUD home with potentially quite a bit of built in equity, as well as improvements I can make to force appreciation. The numbers I've run appear good to eventually turn it into a rental. That's where the question comes in. If you buy a HUD home, are there any legal stipulations that would prevent you from turning it into a rental, or anything else that would hinder an investor? If I were to get this house, I would buy it with an FHA loan and live in it for a period of time while doing improvements until I can refinance it into a conventional loan and then potentially turn it into a rental. If there's built in equity, and I can, I'd like to use the equity via a home equity loan or HELOC to buy other properties.
@Chris Hayes If you are buying it as an owner occupant, you have to live there for at least 1 year. This applies with every transaction you buy if you claim you will live in the property. You should be able to refinance 6 months after you bought the property.
While HUD homes do sell at some discount, the foreclosure market is very dry in some areas. Just make sure to check HUD website every day and take advantage of the owner occupant period before investors can start bidding as well.
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