OT- HUD home

I was just involved in buying a HUD house. Lots of rules and regulations and their way of doing things. I am wondering, is there supposed to be an advantage to buying a HUD home over other listings? Their bidding reminds me of E-bay, but E-bay is better.

around here HUD home generally extremely trashed, all copper is gone, plan on complete tear out and pay accordingly

with all the b/s they throw at you, generally a bad idea unless you can get it really cheap and do the work yourself

Here in my area, there have been some great deals through HUD. Main problem for some though is that most require residency. That is, you can't buy a house and not live in it.

Three recent examples.

#1 Small farm near me. 30 acres, two barns and old farm-house. Had a $120,000 mortgage against it when it was foreclosed on and taken over by HUD. I would of bought it but could not move in to meet the residency requirement. Local guy bought it for $24,000 and now lives in it. At that time, the Town wanted to buy it to mine gravel and offered HUD $60,000 and the offer was refused because of the residency requirement. Since then, now four years later, the new owner sold off a five acre piece (gravel site) to the Town for $90,000. He made out like a bandit! Parcel was appraised for $10,000.

#2 example is my daughter's house. It was foreclosed on with a $95,000 mortgage against it. She bought it from HUD for $48,000 and . . . they arranged to install a new roof, insulation, and a new heating system - ALL at no charge to my daughter. They also arranged to get her a "free" $5000 down payment (not a loan). But, she must keep living there for X amount of years or she will owe money. Yes, it is a complete rip-off to taxpayers, but it IS a good deal for her.

#3 example - HUD house I bought in northern Michigan. This had NO residency requirement and was offerered strictly "as-is." House had previously had a $90,000 mortgage against it. Farmhouse, two nice polebarns and 5 acres of woods. I bought it for $28,000. Yes, it was trashed, but that is what I wanted. Since I'm not living there, my property taxes are doubled. But, since the house was trashed, I proved it in court (Michigan Tax Tribunal), and got the taxes cut by 2/3. Now, it's cheap to hold on to and I am fixing it up slowly.

Here, Colorado, the bid is for like 5 days and then if no buyer they let investors bid the following one day. If not sold, it comes around next month and they "might" reduce the price. That would be a real nail biter to wait out. They don't accept low bids that I know of, maybe 90 percent or better.
The one I bought had a full inspection report of only a little paint pealing and stain on a carpet. Spotlessly clean and newly painted walls. H water heater (new?), furnace, garbage disposal and dish washer checked and working.

The real tragedy of HUD is that taxpayers foot the bill for some real losers to live in a home.

A former co-worker of mine (lives in California now) has friends that own HUD homes. The stories that he told me make my stomach turn. Like---A renter moves out and the sinks/toilets are ruined, the drywall is smashed full of holes, the doors have holes in them, windows broken, floors busted up, etc. (A total nightmare) And this is because a drug addict loser rents the home and he only has to pay $50/month and the taxpayers pay the home owner another $700/month so that a loser can live in a home. (makes me sick)
Some people are better off locked up in jail or prison then living in a rental home.
And people wonder why the USA is broke.

Gun Guru, I have no idea what you are talking about..I guess renting to welfare people which is normal for that.. Nothing at all to do with buying or selling HUD repossessed houses. All most all HUD houses require that the buyer live it it.

I think that the guys I am talking about bought homes that were owned by landlords who had rented to "people on government assistance" Or welfare people, these homes had been HUD homes in the cities in the past. (not good neighborhoods)

I used to have an old boss that owned 4 homes in the city of Detroit. He told me that every year he would get screwed out of a months rent for whatever reason. When a renter moved out the hardwood floors were stripped and refinished, holes were repaired (half-a$$) and he would get $500 per month on average. He ended up selling all 4 homes to a company called Rentco just to unload the homes and not deal with the headache anymore.

I agree 100 percent about rentals. I Was in that business once...never again. The idea of HUD is to get houses that have been foreclosed fixed up and back out where people need them. The paper work is just what you would expect from the Government.

gun guru, You are completely confused about the difference between a Section 8 renter and buying a HUD owned home. A HUD owned home is one that Federal Housing and Urban Development guarenteed the mortgage, and the lender defaulted resulting in HUD owning the home. Same goes for mortgages backed by the VA and Rural Development/FSA that are in default. When these come up for sale(along with the occasional Federal Marshal /DEA/IRS ect sale) good buys can be had and serious money can be made if you know what you are doing and have cash. Sect 8 is a program that the county/state subsidizes some of the rent. Money can be made there also, if you know what you are doing.

I had a friend of mine that bought 17 homes in Detroit in the 70's. Figured that he would fix them up, rent them out, and when the real estate market came back, sell them at a profit. But 2 things happened:

1) The population of Michigan pretty much stagnated - it grew very slowly.

2) The population of Detroit continued to decline. It stated declining in the 50's. Nobody knew that it would go from 1.6M in the mid 50's to under 1/2 M today.

Bottom line, houses never appreciated much. The section 8 rents are based on value. So the rents never went up much. My friend sold out in the 90's, lost a bunch of money.

Another thing: This was a guy that told me that "you never lose money on real estate"... Sound familar?