Wholesaling HUD Homes

This is a continuation of “The Great Escape” audio podcast reality show with Eric Thiele. Eric has been given assignments each week to help him get his wholesaling business started. In this episode, Eric catches us up on the challenges he has faced and the successes he has achieved over the last few months.

Sean: Let’s talk about the numbers on that. So where’d you get the property?

Eric: HUD website.

Sean: So you got the property on HUD website. You bid on it, right? What were the numbers? What did you get accepted at?

Eric: I got the property at $78,000. I’m selling it for $93,000 and I’m renting it a little over a $1,000 a month, for the three months that hasn’t actually closed. So, at the end of the day I’m going to net out about $15,000.

Sean: Wow.

Eric: That’s a pretty good pay day on a fairly inexpensive property.

Sean: Now let me explain something so people understand. There are no resell restrictions on the HUD property. If the buyer was a cash buyer, he could have closed it the following week for the $15,000. If the buyer was a conventional buyer, then he could have taken down the property, purchased the property, and then turned around and sold it to a retail buyer and made that $15,000 spread, less any type of money cost or anything like that. But it’s an FHA buyer and FHA has a requirement to where the property has to be seasoned prior to the purchase. The property has to be seasoned at least 90 days before they can close on it. So, for FHA finance, they don’t allow flips, which is weird. But, it happens. Now there was, I can’t remember where they actually lifted the FHA rule for that. Have you looked into that for your area?

Eric: No. I hadn’t even heard that they lifted it.

Sean: Yeah, they lifted it for a point in time and I think it might still be lifted, if I remember correctly, where you can get FHA financing on a flip.

Eric: I wonder if that’s regional.

Sean: I think it probably is regional because FHA is regional. But I think they did it to stimulate the housing market. I would definitely call a lender in your area and ask them about that particular rule. If it’s in effect, then you don’t lose anything. If it’s not, then you can get the sucker closed quicker.

Eric: Awesome. Well thanks for the tip.

Sean: FHA, at the time several years ago, was the paramount and still is today, the paramount source of conventional type financing, if you will. They lifted the 90 day seasoning rule on FHA deals just to stimulate, because a lot of people are buying properties. Investors are buying properties and fixing and flipping, and having to hold on to it. So, it would be great where you could buy a property, fix it and flip it, and have it sell to an FHA buyer and close on it within 30 days, than have to wait the 90 day period. So that one is good. You have that one in the pipeline. That one’s going to close $15,000 profit.

See “Eric Takes Massive Action TGE Episode 4″ Part 5…

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