Real Estate Investing

When the Office of Housing and Urban Development guarantees a home loan and that loan defaults, the seller is evicted and HUD takes ownership of the home.  These are the HUD listings that people salivate over… you can get them cheap!  The government loves to sell their listings and they love to sell them for less than “street” value.

Often with HUD listings there’s usually a section that calls for the amount of estimated repairs for escrow.  I previewed a HUD house with another agent earlier today and the HUD/FHA escrow amount was over $3,000.  The house needed a lot of work - cleaning, painting, new flooring (the carpet had been removed and we could still see the animal stains on the sub-flooring), the fireplace was a hot mess (heh…), and the railing on the front porch needed to be torn down and replaced.

My colleague said he felt it was too much work for his buyer, but for anyone who was willing to make the effort it could be a real diamond in the rough.  The buyer - after closing and if they got an FHA loan- would make the home repairs and save the receipts.  HUD would have put the amount that was needed for repairs in an escrow account with the closing or title company.  Once the repairs were made by the buyer, they could take the original receipts back to the title company which would then reimburse the buyer from the escrow account.

SOMETIMES, FHA may require an inspection to confirm the repairs were actually made before releasing the escrow funds, but that’s a standard practice.

And now you know … next time you see a HUD house and there’s an escrow amount for repairs, you know that’s the amount you could have refunded to you the buyer from the seller (HUD).

Photo by Carolyn Cole through Flickr Creative Commons.

PUDs are one of those weird real estate terms that most people pay no attention to.  But on one of the latest disclosure forms that the state requires to be signed in a real estate transaction, to inform whether a home is located in a PUD is now mandatory.

So what is a PUD, exactly?  According to Wikipedia,

PUDs tend to incorporate single-family residential uses within close proximity to two-family units and multiple-family dwellings to form a larger diversified neighborhood concept. Schools, churches, retirement homes, hospitals, and recreation facilities begin to find their way into residential districts. Residential districts also tend to use the best land in the community and the most favorable sites are protected from commercial and industrial uses.

These Planned Unit Developments are designed to enhance compatible land uses so that housing, recreation, and retail are located within one development.  Sometimes industrial parks are also in the same area.  When I lived in Lexington, Ky. the local government okayed a PUD named Beaumont Center.  Previously a field of waving grass, we heard that up to 20,000 people would live there - a community within a community.  We started to see apartments, then a liquor store and party barn, restaurants, and finally homes began appearing.  Today it is a thriving community with hotels, shopping, a city library, and affordable homes.  I would live there in a heart-beat!

So why would you have to disclose if a home is located in a PUD?  Because the buyer should be informed in advance if there are any restrictive covenants, homeowner bylaws, and master deeds that can impact how they live.  For example, can they have a storage building?  What if they want to have a yard sale?  By disclosing the rules and regulations within the PUD, a buyer comes in with their eyes wide open and this is how it should be on behalf of the buyer and to avoid liability as a Realtor.

So what the PUD. Find out if you’re buying in a PUD!

CNN.com has a feature story in its business section featuring great buys in Detroit.  I agree that for the square footage, the prices are good, but I thought to look at my own MLS and see what’s available for under $100,000.  This really is a great time to buy!

This little house has just under 1200 square feet, 3 bedrooms, 1 bath, hardwood floors, 4 fireplaces, and is listed at $64,900.

This 3 bedroom, 1 bath house has a little more than 1000 square feet.  It’s really cute inside with newly shined hardwood floors and very close to the university my daughter is attending this Fall. For $77,900, maybe I should consider an investment property.

This next all-brick home is a steal at $79,900.  Also 3 bedrooms and 1 bath, the sellers are leaving the stove, refrigerator, washer and dryer.  Sorry, no dishwasher.

This home is adorable! (I sound like one of those gushing ads who always say “Dollhouse!” don’t I?)  Located on a HALF acre, and featuring 1103 square feet, 3 bedrooms, 1.5 baths… it’s only $84,000.  Beautiful!

The next house is a HUD home.  It definitely needs work on the inside (new carpet, new paint, new bathroom, mold remediation), but for $87,200 and over 1500 square feet, it’s still a great buy.

For the record, none of these homes are my listings.  Also for the record, 125 homes in total came up just in my county outside of Nashville. Amazing!