Specifically interested in knowing how he is able to secure these HUD homes at such a low cost (he states that it is a secret tactic he uses.)
Any insight appreciated!
Scott, there is alot of tips and tricks to buying HUD Homes. When you are bidding please understand that you are bidding against a computer on all of them. There is no way to manipulate the system however there is alot of different tips and tricks that I use in order to buy these homes right and then wholesale them off for quick profits. My average spread in these deals is right around 8k. I have made as much as 36k on a deal and as low as 3k.
John, can you share some of the tips and tricks?
I have your system and it looks great. Unfortunately my local county doesn't have that many properties to choose from. I was wondering if your system will work with other auction sites such as Aution.com, Homepath etc....
I have the same problem in the SF area. No Huds, this system can't work in our area's.
If your intent is to wholesale, don't bother. My partner and I took the course about a year ago, and I bid daily, from one end of my state to the other. We have been awarded one house, back in April that was a money maker. We did really well on that house, but have not been able to get one since. We have been awarded houses, but they were junk at to high of price, even following Johns strategy, so we had to pass on them. That first deal inspires me to bid daily, but I'm basically wasting my time. If I don't bid, I will certainly not get another deal, and if I do bid, I will probably not get a deal.
This was a fantastic strategy once upon a time I'm sure, but John and every other REI Guru push it in thousands of in boxes daily, and with all the people doing it now, they drive the prices up way beyond profitability. The one excepting to this is, if you intend on buying to hold and rent, then it may be worth your time to pursue it. I see properties in bid results constantly from the 81% to 95% range. This does indicate a discount to the listing price.
If you wish to buy and hold in the state of Florida, contact me, I can certainly help you get some of these properties. I work with other investors helping them get these HUD properties.
If you believe he has a secret way bidding on HUD homes I have some swamp land in Florida, I want to sell. When the computer triggers the amount, HUD wants it will send it to a human to review and decide whether HUD will accept it. Most investors will run shills, and I had an HUD guy tell me last year that they got 40 bids from the same IP address, and they started watching for shills.
I bought John's course in May 2013 for $997 and I have used it to turn 6 deals for a total $100K net profit. The course is excellent with detail information. The strengths of the course in my opinion are in the methods presented to sell the properties using gorilla marketing techniques and the systematic method towards bidding. The only real secret to HUD deals is in the systematic daily bidding process and the critical importance to getting in the loop on counters. HUD counters are not advertised. Why I do not know, but you will not get in the loop on the counters unless you are putting in bids every day. Once you know the counter %, keep bidding until they drop the list price, then apply the counter % and you will have a deal. Having said all that, its all based upon supply and demand so some areas of the country will get more of a discount than others. You just have to flex with the market. The other source of value is in HUD under-valuing the property to begin with. The "as-is" value is a real pro appraisal so if the property is trashed the appraisal will reflect it and you can force appreciation by fixing it up. Also there are no deed restrictions with HUDs which is an advantage. There is typically not enough spread to flip these to investors so more typical is to sell to end buyers as is, pre-hab, or full renovation.
Hope that helps!
Can you share which strategy did you use to turn a 100k profit on 6 deals?
Sure, and here is an update, I ended up buying 10 properties through this program in 2013. HUD provides an appraisal of as-is condition value. I had to bid on probably 100 properties, multiple times to get these 10. The average purchase price was 73% of as-is with a range of 50% to 91%. It took on average 73 days to sell 8 of the 10 properties. All but 2 were sold to owner occupants who got loans. The other 2 were sold to investors who paid cash. All properties required some level of renovation ranging from $2 psf to $10 psf depending upon condition of the property. The two I did not sell yet are much heavier renovations in the $20 to $30 psf range of renovation costs. The ARVs are typically well above the as-is appraisals. While I believe it is theoretically possible to buy and wholesale these "with no cash or credit", it would take a very large and responsive buyers list to pull off. Since I don't have that yet, I use my own funds and private lenders to fund the deals. Hope that helps. By the way, we offer our private lenders double digit rates of return or a piece of the profit, whichever is greater. If anyone out there has funds they want to put into play, just message me and I will slot you into one of our next deals.
Thanks for your reply Chris. Its kind of in line with what I was thinking as far as closing on the properties with cash and selling to an end buyer. So do you kind of mix it up with prehabs and full rehabs or you just do full rehabs on all the homes?
Thank you for answering questions regarding this system. I have one more question for you. How much time did you spend each week bidding on HUDs? I've done a fair amount of HUD bidding, and purchased three properties in 2013, so I know how time consuming the bidding process can be.
I personally spend zero time bidding. I outsource it to agents who are happy to do it because I give them repeat business.
I've been bidding on HUDs since 1986 and have gotten quite a few. In the last year I bought 6 and a client bought 3. Of the ones I got 5 of 6 are rentals and all 3 of the clients property are now rentals. One I did cleaning, painting and minor repair and resold for about $23K gross spread.
There are lots of differences in the HUD process from regular MLS purchases. The different asset managers follow different rules and the rules are constantly changing, so you have to keep up.
There are "secrets" involved in the process. For example when you get the unadvertised counter offer, the AM will still sell for less. And another example is when there is a fall through the property may be awarded to the next highest bidder even though their bid is months old. In those fall through cases, it may never be re-exposed to the public. I went to a meeting held by HUD, some years ago and at that meeting they said that they had 40% fall throughs, don't know if that still applies or whether they were just speaking for their regional office.
Some counties have very few or no HUDs available, if that's the case you need to work in other counties to get more possible purchases.
The HUDhomestore.com site defines an eligible owner occupant as "an individual who has not purchased a HUD home in the past 2 years". Does this mean that if you buy with cash, the first HUD home you buy could be in the first 15 day exclusive period even if you don't intend to occupy it?
No you still have to occupy and will not only sign the contract as such but also sign a document at settlement re-affirming you occupancy.
btw the penalty for lying is up to 5 years in jail and $250,000 fine, Do you feel lucky?
Anyone still using John Cochran's HUD Home Bidding System?
What kind of results are you currently having?
How much does John's system cost?
Hi Jim, I have used John's system on and off for a year, and had bid every day since Jan 1, 2014. In my area (Las Vegas), his system of percentage discounts does not work unless the property is a condo that hasn't sold for many months or a property so far out of town that no one wants. His percentages don't work in my area, and I have never been awarded a bid. I have been countered, but usually at 87% at the investor stage. I did buy the membership over a year ago ($997), and now he offers Buyers on Fire as part of this package. When I asked if I could add Buyers on fire under my current membership, they said no (same price of $997 as it was a year ago) I also have emailed multiple times to their support email with questions, and I have never received a response. I have also asked questions on webinars I have been on, and they never respond. There also have been some changes to HUD's procedures this year, and I never see them update that on the webinars or on their membership website. So I am left to think they are just a big sell, with little support...I wouldn't recommend it, unless you live in an area where you actually see HUD selling properties at a big discount
Hi Sue. Thank you for the followup. I checked out the program by watching videos and reading articles online. Some things looked great and some other things did not add up. In a YouTube video John states that you should not waste time with price reduced HUD Homes because there is something wrong with them. I have bid on HUD Homes for years and bought several and can tell you the opposite. If a HUD Home has not been reduced it is usually overpriced and no where near a deal for an investor. Maybe his system worked several years ago in his market, but in my market most HUD Homes are junkers in bad condition now. The nice homes are few and far between and even when they come available they are listed at near full market value making a "deal" unlikely.
In another video John says HUD Homes are usually in great condition, which I have found completely untrue. HUD Homes are usually rough compared to Fannie Mae HomePath homes and other bank foreclosures.
Thanks for the info on this course. I was going to purchase this course after seeing the webinar yesterday but now I'm going to hold off and keep my money. I looked at the HUD homes website in my state (massachusetts) and they only have 10 homes listed!! It seems like this strategy will not work in my area due to low inventory.
Has anyone tried this strategy in Georgia recently?
Hey @Clary C.
If your state had about 180 HUD homes, would you consider using that strategy?
Must you bid in your home state (backyard)? There are only TWO available in my area. If numbers are the key, I don't have numbers to work with :/
@Peggy L, all you need to do is check everyday and bid everyday. But then you also have riverside, and ventura counties to work with also.
@Rashad S .......... hit me up, of course it works there. I got some pointers for you out there.
@Tasha Marek Thanks for the heads up on the other counties.
Join the Largest Real Estate Investing Community
Basic membership is free, forever.