Merry Christmas! Education Subject Poll - Response Needed

I'm preparing for the next SEIREIA meeting upcoming this Thursday at 5:45 pm. I'm pondering what information would be the most helpful to present during the Education segment for the meeting.

I'd like to get some feedback from the SEIREIA members as to what questions you have or information you need to help you move forward with your Real Estate Investing business. Please feel free to ask your questions and/or give me that feedback in the comments below. Here are some topics that I'm considering...

1) How to avoid over-rehabbing, one of the biggest pitfalls for new investors.
2) How to market your FSBO property
3) Where to find funding for your real estate purchases
4) Setting RE Goals for the New Year

Please let me know if one of these or some other topic suits your fancy.

Thanks,
Marti

2 Important Reasons Why Attending a Real Estate Club Is A Good Idea

Build Your Investing Team Through Your Local REIA

A very important group of players for your power team are other real estate investors. One way you can find these investors through Investor Forums, through local real estate clubs, or through web-based real estate clubs.

1) We might use these investors as mentors, but more importantly, they are used to aid in your exits. While attending real estate clubs or chatting with other students, you might find out that one investor is interested in buying beat up homes to rehab and sell. You might also find another investor that likes to buy raw land and develop it.

2) Knowing investors in the area can be powerful because you can invest with those investors in mind. For example, you could speak to the one interested in land and find out where he or she likes buying land and find out specifically what he or she likes or avoids. And then you can find property specifically for him or her. Call the investor up and show images of the property and information on the property including historic values and the neighborhood and then work the deal before you make your investment.

Having other real estate investors can provide the investor with a constant buyer for investments. The investor can reach out to relationships and invest with the end in mind much easier knowing that other investors are anxious for the deals that [you] can provide. 

(Basic text from www.taxlienvault.com, edited by Marti Castle Warr)

Buying a HUD Home: The Ultimate Investor's Guide to Getting a Great Deal on a HUD Home

Hello everyone! Yesterday, 7/12/2013, was our monthly morning meeting for SEIREIA and we had a wonderful session on buying HUD homes. I combined a recap of my experience with buying from this organization as well as some juicy tidbits from an article of the same name by #Mark Ferguson on The BiggerPockets Blog (a place you should really check out for great real estate investing information). Mark had some really good tips to share and so I share them with you here in a very condensed version.

Things to Know About Buying HUD Homes

Before you find a HUD home that you want to pursue, you need to know the following:

1. If you are acting for yourself (no RE agent), make sure you are registered to submit bids on the HUDhomestore.com website.
2. If you are using a RE agent, make sure they are registered to submit bids on the HUDhomestore.com website.
3. Make sure your RE agent's broker has a NAID number. It can take up to 6 weeks to get one.
4. For an investor, do not depend on getting your Earnest Money back if you back out of a HUD contract. There are no contingencies for investors (though there may be 1 or 2 minor exceptions to this). You must be certain you can and want to proceed.
5. HUD does not pay for Title Insurance and closing costs.
6. HUD does not turn on utilities for inspections. However, the investor can and should, though HUD will not refund earnest money because of repairs discovered from the inspection. The house is being sold "as-is." You should know that going in. During winter, HUD will charge $150 to re-winterize, if you as the buyer turn on the water. However, HUD WILL pay for past owed balances and liens. HUD does an inspection on each home before listing called a PCR. (Look for it in the addendums tab in the HUDhomestore.com listings.)
7. If something happens and you need an extension to the closing, the buyer will pay HUD costs as follows:
1. If the purchase price is less than or equal to $25,000 -->  $150 ($10/day X 15 days).
2. If the purchase price is greater than $25,000.01 up to $50,000 -->  $225 ($15/day X 15 days).
3. If the purchase price is greater than $50,000.01  -->  $375 ($25/day X 15 days).
   In any case, should the whole 15 days not be required, this fee will be prorated and the unused portion refunded.
8. There are 2 types of HUD home offerings: 1) FHA Insurable or 2) FHA Uninsurable
1. FHA Insurable homes 
1. Have less than $5,000 in required repairs.
2. Are listed with a 30 day restriction on bidding for Owner-Occupied bidders (OOs) only. Investors may bid starting the day after this exclusionary period is over. 
3. Do NOT try to cheat the system!
   For those who may consider "fudging" on this exclusion, Mark Ferguson says the following, "There is no way around this rule as an investor, unless you are willing to risk committing a felony punishable by up to five years in prison and a $250,000 fine." He says further on "At the very least HUD will immediately cancel a buyer's bid and take their earnest money if they find out a buyer is posing as an owner occupant. If you don't think you will get caught, there are many investors who would love to bid on HUD homes in the owner occupant period who pay attention to who is buying them and would love to turn in cheaters."
2. FHA Uninsurable homes
1. Have greater than $5,000 in required repairs.
2. Are listed first for 7 days in a lottery for government and non-profit agencies to bid and may or may not be listed on the MLS during this period.
3. After the 7-day lottery period, there is a 5 day owner occupant bid period.
4. Investors may bid on the 6th day after owner occupant bid period starts (see tips below).
5. NOTE: HUD stops the clock on the bid period when a bid is accepted. A HUD home listed for 45 days on the MLS may not yet be eligible for investors if the home was under contract for 30 days.
9. Visit HUDhomestore.com and search the listings for State: Idaho, County: Bonneville. All the information is available for each listing to know what bidding period the house is in and who is eligible to bid.
10. HUD does NOT allow assignments, a wholesaler will have to buy the home before selling it.
11. HUD will require a proof of funds letter on cash offers.
12. You must send in a cashier's check from your bank with your initial contract for earnest money, which means you must have the funds available. If HUD doesn't accept your bid, they will refund your money.

Trick to Use as an Investor

1. Bid on FHA Uninsurable homes. You can bid on the 13th day of listing vs. the 31st day for Insurables.
2. Bid as early as possible. HUD's Asset Management Companies review all bids received on the next business day after the OO period expires.  If the property is still on the website, it is still available for bidding.  Some AMCs accept bids as early as 6AM after OO period expires. Soooo, Investors should bid just after midnight on the day after OO period expires. (Day 6 after the OO period starts.)
3. Mark bid as "Hold for backup" for 2 reasons:
1. HUD will not make buyers stick to a bid marked "Hold for Back Up" if HUD accepts their bid and they do not want to proceed. (This is one of those minor exceptions I mentioned earlier.)
2. If the property comes back on the market (because, for instance, an OO contract fails), HUD reviews all the back up bids before they put the property back on the market.
3. There is a high cancellation rate on OOs on Uninsurable HUD homes. OOs financing often takes weeks. By the time the first OO decides to back out, the other OOs have moved on, then in comes the back up bids.
4. Early in the bidding HUD allows AMCs to accept bids with a net price to HUD of about 11% below asking price. Net price = bid minus commissions and closing costs. If an investor does not ask for closing costs, then the AMCs can accept a bid of about 5% less than asking price. However, if the home has been on the market for 60 days or more and there are no other bids, the AMC can ask for a special bid approval for less, sometimes up to 20% below asking. 
5. Even if you think your bid is too low for HUD to accept, submit it anyway and have your agent mark "hold as backup". HUD will keep the bid in the system and if the price is lowered, HUD will review previous bids in their system before they look at new bids.

There you go! Please feel free to comment, forward, or share this information with anyone interested. 

Happy HUD House Hunting! 

Idaho Sawtooth Mountains