I recently purchased a HUD here in Louisiana. It is possible to see the properties. You need to find a HUD qualified agent in the area where the property is located. They will be knowledgeable about the process and will have the “HUD key”…(HUD doesn’t use lock boxes in this area).
You only see the listings for a few days because that’s usually about how long they last. Here is how it works:
(1) The HUD property is listed for sale (go to http://www.hud.gov/homes/index.cfm for further explanation and state-by-state listings). Here in this area the new homes are normally posted on Thursday.
(2) For nine calendar days the priority purchasers are those that will owner-occupy the property (they are buying the house to live in).
(3) If, after the nine days, HUD has not received an offer acceptable to them, the listing opens up to everyone. This will be your chance as an investor to bid on the property. Here in this area, the competition is pretty strong once it opens and they usually sell the first day. All bids received (it is an electronic process) are reviewed every day at the cut-off time. The highest bid (meaning the highest net $$$ to HUD) wins as long as it meets the HUD accptance threshold. You can ask HUD to pay closiong costs, etc., etc. but that cuts into the “net to HUD”.
A “203K” is a federal loan program to rehab substandard housing. See: http://www.hud.gov/offices/hsg/sfh/203k/203kabou.cfm
It is federal “insurance” that allows you to take out a single mortgage to pay for the home AND the repairs.
I paid $51K for the HUD that I bought and have put about $3,500 into it (doors, baseboards, paint, carpet, paint, new locks, new screens (a MUST in Louisiana), furnace maintenance/cleaning, a refrig (did i mention paint?), etc…mostly all cosmetic kind of stuff. I paid cash for the property and the closing costs were minimal.
The property should appraise at about $60-65K now (well, soon, I am just about finished!). It will rent in this area for $650-675. Based on the new appraisal and a solid lease, I will have no trouble doing a cash out refi and recoup most of my out-of-pocket and still leave me a strong monthly positive cash flow.
Hope this helps!