Use The HUD Inspection Checklist To Help Make Offers
When it comes to real estate investing it is vital to have as many cards in your deck as possible. We want to help you not only to fill that deck with all the necessary cards, but help you obtain those that will actually stack the deck in your favor. You want to increase your chances of experiencing repeated jackpot fix and flip investments.
That’s why we are presenting this quick tutorial about one of our favorite tools to help us determine what rehab needs to be completed on a property, but also how to use it as a negotiating tools when talking with sellers. Introducing the HUD inspection checklist.
Is It True That You Make Your Money When You Buy?
One of the first steps to winning with a real estate investment is to acquire the property for the lowest possible price. You may have even heard the adage that’ you make your money when you buy, not when you sell.’ As you’ll discover, there is a great deal of truth to that statement. Of course there are a myriad of things that can happen after purchase to cause you to lose money on a deal, this is afterall, real estate investing. But if you start the investment off by paying too much for a property there is not much that can happen later in the deal to turn it into a winner. And this post is going to focus on making offers so that you learn how to pay a low price that is fair and will allow you to profit nicely.
Why The HUD Inspection Checklist Helps You Make Offers
A valuable resource to use when determining what to offer is the HUD inspection checklist.
Fix and flip or wholesale real estate investing is built on finding deeply discounted properties, with very motivated sellers. Sellers for who a quick turn around is not just preferrable, but a necessity. People facing a foreclosure may fall into this category. Or those involved with a divorce or tax lein or other legal action. Often, out of state property owners can be good candidates here.
Selling a property quickly requires that it appeal to the largest target buying pool possible for that type of home. The vast majority of homebuyers are going to need to get a bank loan in order to buy, a regular mortgage. Those home buyers are going to want an FHA backed mortgage.
Enter the HUD inspection checklist.
The checklist is designed to let home buyers, inspectors, lenders and the like know what items and conditions need to be present in order for a home to qualify for that FHA backed mortgage. And many motivated sellers find themselves with a property that doesn’t meet that criteria. Someone lacking the resources; be they time, money, skills or even the inclination needed to get the property into that saleable position will actually benefit greatly by working with a real estate investor. This is where you can help them out.
Example of Using the Checklist in Negotiations
Let’s imagine a hypothetical opportunity.
You are an investor working in the Atlanta market and one of your tried and true property finding tactics is working the referalls you get from a local probate attorney. She calls and lets you know about a group of siblings she is currently working with that inherited a home after their mother passed away. Let’s call the siblings Phil, Lisa and David, and they all now jointly own this home and want to sell it.
They’ve run into some obstacles when trying to list the property for sale. Because their mother lived alone for quite some time on a fixed income the property has not had the upkeep it really needed. Two of the three live out of state, and none of them feel like they have the time or money to get the property in a saleable condition
Lisa is the sibling that lives nearby. You go through the house with her, using the HUD inspection checklist to point out the work that needs to be done in order to get it into a condition that will allow a buyer to obtain one of those traditional FHA backed loans. This will help help her understand the challenges she and her brothers face, and it will show her the advantages of selling the property to you at a lower price so that they can move on. She will understand that given the limited time and money the three of them have to devote to rehabbing the house that they will profit both financially and with time saving by selling it to you. She then presents this to her brothers so that they determine to sell to you. It is really a WIN/WIN.
Take Action Today
Obviously utilizing this checklist should be part of your process when assessing the values of houses you are considering for fix and flip investing. We want to help you learn how to make offers affectively and grow your house flipping business.
Learn how to get access to this checklist and see how all this works by attending our next webinar.