Hey all you Texas Investors,
I’m looking at a very promising property, which is worth over twice it’s listing price. It’s a HUD foreclosure. This is what my realtor (buyer’s agent) told me about the HUD, bidding, and wholesaling:
HUD states that in Texas you are required to live in the house for at least one year. You cannot put this house up for sale until 365 days after you buy it. You cannot assign this house to another investor and you cannot rent this to someone else for the first year. I don't want any part of that, as I and my office could get in trouble.
So, can any Texas investor give me some creative advice on how to not break the law but still wholesale this house? Is an LLC a possibility? If I pay cash for the house, couldn’t I then do the dreaded Lease Option since I’d own it outright? What if I took a HELOC out? Would this be considered cash by Texas Law and HUD?
Looking forward to your replies…
If you buy the property during the Owner/Occupied (O/O) period, you must live in the property. Yes, they do check and investigations can be handled by the FBI because it is s aFederal crime.
If you wait until the “All Bidders” period and pay all cash or bring your own investor financing (not FHA financing), you are free to do with the property as you please. The O/O period is only nine days. After that, make your bid as an investor.
FOR ALL: These programs are put into place to provide “decent” properties to folks that are needy. Please honor the O/O period for folks that need low cost housing to live in. It’s the right thing to do and it’s the law!
Keith
Well said Keith.
We should never get into any business and loose the human side of law and find ways to go around them… help the needy falks.
DFW
I spoke with Bob last night about this deal. He’s a good guy with his heart in the right place, but I think he’s getting some bad advice from his HUD realtor. Maybe you experienced HUD investors can help out?
The info he’s getting is that HUD is now running the OO’s concurrently with the Investors. It’s been my understanding that OO’s are run first and only if there are no acceptable bids will they run through investor bids. Is this still true?
It’s also my understanding that as long as it’s clearly an investor NOO bid, that he’d be good to go and exempt from occupancy requirements. Is this still true?
Thanks,
Dave
Thanks for the replies so far, folks. Yes, I would never break the law, but I was just wondering if it was possible legally to wholesale the property. There are so many creative methods in REI I was just asking if there was a legal and moral method to doing this.
I’m going to submit a bid as an investor and if I get it, then great. If I don’t get it, then hopefully it’ll go to a family or owner/occupant who needs it more. Once again, thanks for the responses - much appreciated!
Just to reiterate:
The property first ids offered to O/O for a period of nine (9) days. It is illegal for an investor to make an offer during that period. The investor can get in trouble, the realtor can be fined and/or lose his HUD certification, etc., and the Broker can be removed from the HUD program.
After the nine days, the property is open to All Bidders - bid then and good luck!
Bob - if you send me a PM with the state, city, and address of the property and I can tell you the status in about 2 minutes…and don’t worry, I only invest in my own parish!
Keith