Listed price $47,000.00, on the market now for 48 days. My LLC offered $37,600.00, exactly 80% a week ago. On Tuesday, I learned from my realtor that HUD countered at $41,500.00. We chose not to increase our offer, and we pulled the offer. Today, my realtor calls back, saying HUD decided they will take my offer, if I am still interested.
It will rent for $650.00, tenant pays all utilities save water. Cash flow, calculated on this site, will be $248.00 per month. It is already a pretty good deal, but not quite a 2% winner. I would like your advice. Lock up the HUD at $37,600.00 or counter with a lower offer. What would my fellow BP investors do in my place? I have more potential renters looking for a home, so I'm tempted just to get this one in the boat.
Should you buy a 55-75k assset for 38k+3k=41k. ..... Sure
If you end up not wanting to keep it just flip it quick 10-15k net.
I think once you have made an offer at that price, it would be hard for them to accept a lower offer. Just my opinion.
Seems like an OK deal to me. You aren't going to make a fortune on it, but you probably won't go broke either.
Good luck with it, keep us posted on the outcome.
You would not be able to counter HUD again. Once your offer is accepted, you only options are to turn in the contact or not. If you do not turn in the contract then the property will be returned to the market, If you place another offer you will receive the same generic counter as before and maybe at some point they would accept the lower offer. During that time anyone else would be able purchase as well
Everyone, thanks for your input, facts, and encouragement. We signed the deal today. The only issue I see is possible fraying of vent pipe in the attic...the base of the pipe is wrapped in asbestos liner, and is flawless. At the top of the pipe, it looks like a different material altogether. Going to have my plumbing contractor look at it and advise if we should wrap it or not. We have the 15 day inspection window after HUD signs. I see no deal breakers. Still, guys, the 2% rental is elusive.
A key issue here is the early onset of Minnesota winter. I don't want to leave this on the market another 30 days to get a $2,000 reduction on it, only to have to hold it all winter, because most tenants won't move in the winter, from what I've been told.
Greg, how did you do the @David Moore designation? I cannot figure that out.
@David Moore you just type the @ symbol and just start spelling the name of the person
Keep in mind on a HUD that you will pay all the costs to turn on the utilities above and beyond the cost of the inspection and you will not receive you $500 earnest money back if you do not close
@David Moore As Greg H. said, there is no inspection window for investors, only owner occupants.
As you had stated, it's NOT a quite 2%, however it's still GOOD deal as your cash flow is over $200 a month. Lot of investor can't get $200 per door even for single family properties.
Range between $55,000 to $75,000 is quite large. Check with a realtor and find out median sales price of the high school district of subject property or 1 mile radius, add your buying, selling and holding cost to that median price. If you are still under the median price, you are doing pretty good.
And yes, once HUD accept your offer, you have to either submit your paperwork (earnest money, etc) or they will put the property back in market.
There are other factors that will be mentioned to you by other fellow BP members.
Since you have set your objective for the return you want on your rental and are apprehensive about the return and the issue of winter rental, I would recommend flipping it. This will give you the comfort level you need and add to your operating capital while not having to compromise your objectives.
Sounds like a solid deal, and as was mentioned above, if you decided you didn't want it, you could always resell it for a profit (assuming your ARV numbers were accurate).
Thanks again, all, very much. @Wayne Brooks, I read that very thing in the HUD documents yesterday, and my realtor assured me it won't matter. He is a good man, so if this is a mistake, it will be a good opportunity for both of us, my realtor and I, to learn. @James Syed, that is a great idea on determining the value. I'll ask my realtor as you suggest.
@David Moore This deal looks good enough to me as a buy&hold. Are you focusing on buying houses from HUD? or this property happens to be from HUD?
@ Emma Chen,
I'm focused on looking for value opportunities from all sources. Around the Twin Cities, where I live, much of the housing is overpriced. I buy in a smaller town where I have a good number of relatives, and where everything is affordable, and rents are decent. This is my first HUD contract, though this is my 2nd HUD attempt.
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