Hubzu bidding strategies
Buy and Hold Investor and Real Estate Broker · Midwest · Member since 2014 · 30 posts · 5 votes
Hubzu bidding strategies
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Rental Property Investor · Manteno, IL · Member since 2009 · 2k+ posts · 2k+ votes
11yre: Cash Buyer.
No. I wish. I am an opportunistic buyer maybe. But definitely not a cash buyer.
If I had to put down 25% plus pay rehab costs out of pocket on every deal, I'd have
about 3 houses right now instead of 31 (will be 32 as of next week).
Nope, I'm just a bottom feeder that watches every source of deals there is and have been able to get lucky that, lately, there seems to be one really great deal almost every month.
My last 5 deals have come from: HUD, hubzu, homepath.com. They were all on MLS. Although the one hubzu deal seemed to have slipped thru the cracks on MLS and wasn't there for several months - which is why I think I was able to get it so cheap.
But my model is very simple. I have to be all in (purchase plus rehab) at 70% or better. I buy with hard money and they fund the entire purchase and the entire rehab - as long as my ARV is under 70%. I pay points/fees/closing costs out of pocket.
That limits my out of pocket on most deals to anywhere from 5k to 8k. In this run, there were a couple of houses I went over that out of pocket just to make the numbers work and because I really wanted the house. The real reason I did it was because I was so anxious to hit that 20 property mark before the prices went too high and it priced me out of the market.
That 20 number was really my dream goal when I started 7 years ago. Who knew I'd end up going on such a crazy run like this. Since the end of October of last year thru the 27th of this month (when I close on #32), I will have added 13 homes. And this was after averaging 3 homes a year every year for 6 years. So that is not a typical pace for me by any means.
I think the deals were always out there. But I never had the kind of financing options I have today. Great hard money lenders. And my end loan financing has really opened up. The local banks are all doing the refi's for me. Whereas, in the past, one bank might be doing them and the others were saying they couldn't do any more. Then that one bank would stop and another would start up again. It was a huge task trying to find end loan financing during the bust period. I spent ten times more of a time trying to find financing than I did trying to find deals.
And I'm sure this run will end. When I first started using one of my new hard money lenders just at the start of the run, he came out to see one of the houses/deals of our 2nd or 3rd deal. He pulled me aside and told me that I needed to take advantage of this run and keep buying every single one of these that I could - because there's no way it was going to last forever.
Whats helping is that I now have built up a really nice chunk of cash flow so that my rental income is now feeding the out of pockets costs on the deals.
But I also cashed out my 401k and used most of it to feed some deals right before I went on this run. I really thought the home pricing was done for me so I figured it was ok to put that money into a couple of deals. Little did I know I would get this many homes. I am now refinancing one of those houses to pull 20k of those funds back out.
Every single dollar counts when it comes to my reserves and my ability to continue adding homes while I can.
Whats even more amazing is that the cash flow on the deals I've picked up during this run has been even better than on the deals I was getting during the bottom of the bust.
I think the rents have really gone up in my area and thats helping me quite a bit too.
I used to have a target of 350/mo gross profit (rent minus PITI). I'm now getting 400 to 500 a month in gross profit. Which, relatively speaking, is pretty good considering I'm all in on these properties at 5 to 7k.......
I have another recent post on BP showing the actual numbers on my last 3 deals.
http://www.biggerpockets.com/forums/109/topics/152...
I have a couple of posts in that thread but one of the ladder ones shows the numbers on my last 3 deals - i.e. purchase price, rehab escrow, actual out of pocket, loan amounts, rents, gross profit.
42 Replies
- Van Buren, AR · Member since 2015 · 2 posts · 2 votes11y
Originally posted by @Matt Overbee:
@Drew Wiard They generally issue clean title from my experience and others I've heard about.
@Cara Saffell No I believe the starting bid is what it is. If no one bids by the end of the bidding period they will usually lower the starting bid for the next bidding cycle. But it means very little, because there is a reserve price that is the only thing that matters. They'll lower the starting bid just to try to stir up some activity.
Thanks, Matt! Sure do wish there was a way around this whole auctioning thing where I could actually offer a price to a person and not a computer!! lol
- Title Representative · Palestine, TX · Member since 2014 · 18 posts · 14 votes11y
Just a note on Hubzu, Hud etc. homes. Be sure you look at the house in google street view if you are not local. I was following a house and wondered why no one was interested in it then I looked at the property. There is a car junk yard right next door with junker cars about 6 feet from the side of the house! Of course they did not show that in their pictures.
- Flipper/Rehabber · Alhambra, CA · Member since 2015 · 8 posts · 2 votes11y
Originally posted by @Mike H.:
re: Cash Buyer.
No. I wish. I am an opportunistic buyer maybe. But definitely not a cash buyer.
If I had to put down 25% plus pay rehab costs out of pocket on every deal, I'd have
about 3 houses right now instead of 31 (will be 32 as of next week).Nope, I'm just a bottom feeder that watches every source of deals there is and have been able to get lucky that, lately, there seems to be one really great deal almost every month.
My last 5 deals have come from: HUD, hubzu, homepath.com. They were all on MLS. Although the one hubzu deal seemed to have slipped thru the cracks on MLS and wasn't there for several months - which is why I think I was able to get it so cheap.
But my model is very simple. I have to be all in (purchase plus rehab) at 70% or better. I buy with hard money and they fund the entire purchase and the entire rehab - as long as my ARV is under 70%. I pay points/fees/closing costs out of pocket.That limits my out of pocket on most deals to anywhere from 5k to 8k. In this run, there were a couple of houses I went over that out of pocket just to make the numbers work and because I really wanted the house. The real reason I did it was because I was so anxious to hit that 20 property mark before the prices went too high and it priced me out of the market.
That 20 number was really my dream goal when I started 7 years ago. Who knew I'd end up going on such a crazy run like this. Since the end of October of last year thru the 27th of this month (when I close on #32), I will have added 13 homes. And this was after averaging 3 homes a year every year for 6 years. So that is not a typical pace for me by any means.
I think the deals were always out there. But I never had the kind of financing options I have today. Great hard money lenders. And my end loan financing has really opened up. The local banks are all doing the refi's for me. Whereas, in the past, one bank might be doing them and the others were saying they couldn't do any more. Then that one bank would stop and another would start up again. It was a huge task trying to find end loan financing during the bust period. I spent ten times more of a time trying to find financing than I did trying to find deals.
And I'm sure this run will end. When I first started using one of my new hard money lenders just at the start of the run, he came out to see one of the houses/deals of our 2nd or 3rd deal. He pulled me aside and told me that I needed to take advantage of this run and keep buying every single one of these that I could - because there's no way it was going to last forever.
Whats helping is that I now have built up a really nice chunk of cash flow so that my rental income is now feeding the out of pockets costs on the deals.
But I also cashed out my 401k and used most of it to feed some deals right before I went on this run. I really thought the home pricing was done for me so I figured it was ok to put that money into a couple of deals. Little did I know I would get this many homes. I am now refinancing one of those houses to pull 20k of those funds back out.
Every single dollar counts when it comes to my reserves and my ability to continue adding homes while I can.
Whats even more amazing is that the cash flow on the deals I've picked up during this run has been even better than on the deals I was getting during the bottom of the bust.
I think the rents have really gone up in my area and thats helping me quite a bit too.
I used to have a target of 350/mo gross profit (rent minus PITI). I'm now getting 400 to 500 a month in gross profit. Which, relatively speaking, is pretty good considering I'm all in on these properties at 5 to 7k.......
I have another recent post on BP showing the actual numbers on my last 3 deals.
http://www.biggerpockets.com/forums/109/topics/152...
I have a couple of posts in that thread but one of the ladder ones shows the numbers on my last 3 deals - i.e. purchase price, rehab escrow, actual out of pocket, loan amounts, rents, gross profit.
Great post! Thanks! Which hard money lender do you use?
- Investor · TN · Member since 2014 · 508 posts · 167 votes11y
I purchased a home through the website of "GoHoming" in 2012 before they renamed it to Hubzu. It was a little different then because the buyer fee was only $199 but it sounds like the same convoluted system.
I am going off memory here but my story is similar to others. There were no bids that I am aware of for months and then just before the auction end, I bid the minimum with some seller paid closing costs. Within moments after bidding, another bidder shows up. I did not bid any higher and the next day received a counter offer for a higher amount and no closing costs which I rejected.
The auction started up again after a day or two. I waited until the end and then bid the same amount again. The next day they came back with the my price but less closing costs so I accepted.
That's when the delays and lack of communication started. It took much longer than needed and lots of calls to a foreign country but we closed with a great deal.
@Drew Wiard, we received a clear title with a special warranty deed.
- 11yEngelo RumoraBusiness MemberInvestor · Toledo, OH · Member since 2013 · 4k+ posts · 2k+ votes
Originally posted by @Matt Pieper:
I have my sights set on a Hubzu listed property.
They started the bid at 208k and with no other bidders, I bid to 210k at the last minute. The reserve had not been met, and they Emailed the following day with a counter of 269k (appx 280 after the 4.5% buyers premium they charge). I declined.
Now, as expected, they relisted the house with a starting bid of 210k. There are still no bidders, and it doesn't look like there will be.
My question: Do I still bid the 210k to keep their system aware of my interest or just let the auction expire and keep watching until they lower the price (and potentially the reserve)? I think the property is worth about 235k in its current condition.
On a side note- does anyone know what percentage of the commission the buyer's agent receives?
Thanks!
Matt
Hi Matt,
Hubzu is a pain although we bought some great deals on their auction platform lol
We had a connection at Ocwin also so we would bid on properties as they were being cycled over and over on Hubzu - That was definitely a waste of time.
Every cycle they drop their desired sale price so just keep stalking :)
Thanks and have a great day.
- Investor · west seneca, NY · Member since 2014 · 376 posts · 211 votes11y
hi matt. i have had some experience with hubzu, none of it good. i bid on a property, the only bidder. my bid did not meet the reserve so they countered my offer with an offer $8000 above my offer. i accepted. thats where the trouble started. i immediately got an email from hubzu confirming the offer and was told i had 2 days to sign all the paperwork and get it and the earnest funds back to them. the problem is, they never emailed the paperwork with the email. i went thru hell just to get them to email these to me, after several emails from them telling me that they were going to cancel the sale and relist the house if i did not meet their demands. i called them directly only to be sent to some clearing house in india that handles their work for them. it made matters worse that the people i was trying to speak to there could not be understood due to their strong accent. i finally had to ask to speak to a manage, who had an even worse accent. i hire an attorney to deal with this. after several attempts to get them to understand that they now had to deal only with my attorney, they finally got the picture to deal with just him. we finally got all the necessary paperwork from them to close, after several more threats to cancel the deal. we filled out all the paperwork and faxed it back to them only to have them tell us that they received only 1/2 of the pages, not once, not twice but 3 times. they received 1/2 of the paperwork 3 times?????? again, another threat to cancel the deal. finally, we sent all of the paperwork, the earnest funds and everything else they needed to them. a couple of days later, they cancelled the deal and relisted it. they did send my money back but they ultimately sold the property after several relistings for $4000 less than they had it sold to me. do some research on biggerpockets for hubzu and see what other people have dealt with these morons. i would run in the other direction. i finally bought another rehab house on auction.com and had no issues with them at all.
- Frisco, TX · Member since 2017 · 1 post · 0 votes9y
I've used hubzu to purchase 2 homes for clients in the past year. I would advise to steer clear of this site. The first time we used their title company, they didn't order the survey until 2 days before closing, then lost my buyers down payment check. The second time after waiting 2 1/2 months to close they couldn't the seller to sign all the docs in time and we ended up canceling the contract after my buyer had already signed. I've read many reviews and reports on hubzu and what appears to be the parent company OCWEN (Altisource) and hardly any of it is positive.
- Member since 2020 · 4 posts · 0 votes6y
I'm new to Hubzu.com. Today, a friend placed a bid. Someone else placed a higher bid. My friend submitted his bid as a backup. The bidding closed. Moments later, the property was listed again for a lower amount than previously. My friend's card was charged a $2500 deposit. Is that a trend/indicative that Hubzu.con may contact my friend to make a "counter-offer" as the "backup" offer?
- Member since 2023 · 1 post · 0 votes3y
Quote from @Mike H.:
Here's what I typically see. They start out crazy high. Then they come down over time. When nobody bids on the auction a couple of times is when you typically see them lower the reserve. Sometimes, I think they just lower it because the seller is getting feedback from the agent that it needs to be lower.
But once you get some bidding on the property and it goes back to auction because the reserve isn't met, they tend to start the bidding again at the highest point of the last auction.
Best bet is to try to bid about every other auction so you can see what their reserve is but let it go on some auctions so that noone bids so they continue to lower the starting price and the reserve.
As an fyi: I've only gotten one property off the site but it was a phenominal deal. And I did that very same thing.
It had an initial listing price of 141k. Their minimum was 165k. I watched the house for several months until the price was even remotely worth considering. I think I jumped in when it hit 124k just to see what it would take (they were still in the 140's).
I kept at it for another 6 weeks or so bidding on about every other auction. Finally got it for 99k plus another 4.5k or so in fees (103k was my actual price). Put in 20k in rehab. It appraised out at 200k. I kept it as a rental at 1650/month. Had it rented before I even closed on the purchase. It was that good a deal.
So stick with it. And, as long as nobody else as bidding on the house, don't be afraid to let it cycle thru without a single bid. But don't do it too often either just in case their reserve/counter might actually be in your range.
There's always a balance to this - in getting a great deal versus trying to get a bigger discount. As long as I'm getting a great deal, I don't worry about the discount I'm getting. I'll pay over list price if the deal is still great over list (although that never happens).
Good luck. There are deals to be had on that site. Few and far between for me. But even if its one deal every 5 years like this one, thats still one unbelievable deal every 5 years. :-)Thanks Mike for your post to learn myself Appreciated
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