Building Wealth Real Estate Investing Personal Finance Get Out of Debt
Subscribe To This Site
Flip This House
Creating Wealth With FHA Foreclosures
The following is the account of how I became the protagonist in my own version of Flip This House. I bought one of the many HUD foreclosures available through my local HUD foreclosure list . Over the next couple of months I went through the whole process of remodeling, marketing and selling.
Yes, I said selling.
Even though we are in a market “where nothing is selling” (early 2009) I was able to sell this house for a good profit and I am going to show you how I did my first “flip”.
I had been involved in many opportunities for education in real estate investing but house flipping was not one of them. Although I like to challenge myself in order to learn new things I was by no means prepared to tackle the challenges of doing the major overhaul that FHA foreclosures usually require and then attempt to flip this house. But, this house presented a great real estate investing opportunity so I knew I could not pass it up.
From FHA Foreclosures to HUD Foreclosures
FHA foreclosures are houses that are foreclosed upon by the lender (can be any bank) but the loan on that property was a FHA loan - meaning it was insured by the Federal Housing Administration. Therefore when the bank forecloses on the property FHA takes back both the loan and the property from the bank that foreclosed [1]. This in turn creates an opportunity for you and me, let me explain…
FHA transfers the property to HUD (Housing and Urban Development) for dispossession. HUD then tries to sell its many HUD foreclosures through a bidding process. Without going into the lengthy details of this process, the homes are first offered to owner occupants (people that are going to live in them) if nobody buys them then anybody, including investors, will be able to bid.
The way you can benefit from this is that HUD will automatically lower the price of the house if there are no bids. HUD foreclosures are different from regular foreclosures in that HUD does not care what the market value of the house is, if it doesn’t sell they will keep on lowering the price by a certain percentage, until it does . Better yet, the percentage discount gets bigger as time goes by.
So, when one of the agents I work with contacted me with this opportunity it caught my attention and I looked it up in the HUD foreclosure list. Sure enough because the house needed quite a bit of work (a lot actually) it had gone unsold for several months.
The following are the lessons I learned in house flipping. I will show you how you too can flip this house:
Selecting, Hiring and Managing Contractors. When explaining how to flip houses one of the best house flipping tips I can give you is to try and consolidate as much work as you can under the least number of contractors...
Do you have a great story about this? Have questions? Want to get started flipping houses?
Share it!
What Other Visitors Have Said
(Click below to see contributions from other visitors to this page...)
Reader mail: Doing the work yourself when flipping houses
Not rated yet
I’ve been following your website for quite a while, especially the house flipping part. I'm very interested in house flipping myself and am trying to start ...
Partnering with Family for House Flipping
Not rated yet
I am interested in asking some more questions geared around flipping houses. My brother is a general contractor so using him would be my best option. If ...
Cost of mold remediation
Not rated yet
I love your blog! Just curious how much mold abatement costs.
LM says: Thanks you so much for the love :-) Mold abatement can range widely ...
House flipping my first deal
Not rated yet
Hello, I am not sure how this works, but I have an offer on my house of 20,000. The house needs a lot of work its old and I believe it has asbestos and ...
Dealing with HUD Foreclosures and repairs
Not rated yet
I recently won a bid for a HUD foreclosure and since the time of my bid acceptance there has been some water damage done to the property because of recent ...
Question on flip this house
Not rated yet
I have been investing for a while, and I congratulate you for the numbers on this project. My first one was a big flop, but in spite of that and behind ...