4 Lessons Learned from buying a HUD Home.

So its official! I have purchased my first home, and as a person who was looking for a deal, but also needed to put a roof over their head I decided to purchase a HUD house.  Here are a few positives and negatives to consider

Positives:

1) Equity Upside- research pre-flip and post-flip comparables if available. Luckily, Norfolk  is an active flipper market and I was able to find several comparable properties. I purchased the home for 215, and if done correctly, the home will be worth 255-265 when we are done.

2) Limited Competition- there is limited competition for people purchasing HUDs as owner occupants. This is because HUD provides an exclusive bidding period only open do individuals or families 

Negatives:

3) No History or warranty- Vacant properties will tend to hide their problems from you. For example, the property I purchased ended up having a rusted-out wye behind the kitchen sink that had been dripping water into the crawl space in the months leading up to its winterization. I had to tear out the drywall behind the cabinets to gain access to the damage.

4) Cash is KING- If I were to use cash vs. traditional financing I would have been able to take the initial investment out after refinancing and been able to employ it elsewhere. However, since this is a house I am planning on living in for at least 5 years, I believe that this first purchase (though very educational) is a disqualified as an income producing asset.

More to come!

Much love,

Brody