This is episode #335 – and my guest today is Larry Goins. Larry is a well known investor and educator, and he’s one of the top HUD investors in the country. HUD homes are foreclosures that were insured by the federal government, which are now being sold.
Larry has purchased hundreds of HUD homes, and is actively buying 10-20 new HUD homes each and every month. He’s here today to teach us all about HUD properties, and provide advice on how you too can start buying hud homes!
Mike: This is the flipnerd.com Expert Real Estate Investing Show, the show for real estate investors whether you’re a veteran or brand-new. I’m your host, Mike Hambright, and each week, I bring you a new expert guest that will share their knowledge and lessons with you. If you’re excited about real estate investing, believe in personal responsibility, and taking control of your life and financial destiny, you’re in the right place.
This is episode number 335 and my guest today is Larry Goins. Larry is a well-known investor and educator and he’s one of the top HUD investors in the country.
HUD homes are foreclosures that were insured by essentially the federal government which are now being resold, opening up an opportunity for other investors. Larry has purchased hundreds of HUD homes and is actively buying 10 to 20 new HUD homes each and every month. He is here today to teach us all about HUD properties and provide advice on how you too can start buying HUD homes. Please help me welcome Larry Goins to the show. Larry, welcome to the show my friend. Larry: What’s happening?
Mike: Did you wear that hat for me today?
Larry: No. Actually, I got this hat for Christmas and I love it. I’ve been wearing it every day. Mike: You haven’t taken it off yet. It looks good. It looks good man. It fits you well. Larry: I appreciate that. Mike: So I’m excited to have you on today and as I was telling you, I mean obviously you’re known as the HUD house guy and I know a few people that buy HUD houses but nobody I’ve had in the show before other than you that we’ve really gone into a lot of detail and I think I’m excited to talk about because we’re at episode 335 here. There are not a lot of topics that we haven’t covered. Larry: That’s awesome. Mike: So there was a time where I felt like every third show was talking about self-directed IRAs again. I’m like, we got to find some variety here and hopefully our listeners didn’t get turned off by that. But this is going to be an exciting episode. I’m so excited to talk about HUD houses. I’m excited to talk to you today. Larry: That’s awesome man. Me and you both. Me and you both. I love HUD houses.
Mike: Well, hey, before we kind of dive into it, for those that don’t know you which I know a lot of folks do know you, but for those who don’t know you, tell us a little bit about your background.
Larry: Okay, sure. Well, my name is Larry Goins. I live at Lake Wylie, South Carolina. It’s just across the state line from Charlotte, North Carolina and I bought my very first house in the early ’80s. In fact, it was probably ’85, ’86, something like that, a long, long time ago. My very first deal, Mike, was an FHA non-qualifying assumable loan. Most people don’t even remember those. Mike: There are some discussions right now to bring assumptions back. I don’t know if you know that. Larry: Wow. That would be awesome. Mike: That would be interesting. Simple assumptions. You pay $25, $30 and just take it over. Larry: That would be great but you know what, it probably won’t be available for investors owner occupants only because it was available to investors for a while and then they stopped that, just like they did the FHA 203(k)(b).
Mike: Yeah. Well, I know Bruce Norris is actually meeting with Fannie and Freddie to say, “Hey, if you guys want to take the risk away from taxpayers, just let investors assume these things.” So it would be interesting and they’ve actually been calling him out from my understanding to have those discussions. So that’s interesting. Larry: That is great. That is great. That’s awesome.
Mike: Well hey, what the heck is a HUD house?
Larry: Well, that’s a great question. A HUD house basically started as an FHA loan. Now, FHA doesn’t make loans, they insure loans. You go to Bank of America, Wells Fargo, whoever, and you get a loan and it meets FHA guidelines but the lender actually makes the loan, but FHA insures the loan, a portion of the payment every month goes to pay that premium, the insurance premium.
So if the borrower defaults, then Bank of America or Wells Fargo, they will contact FHA, they’ll cash in their insurance policy, FHA pays them off, and then FHA forecloses. It becomes a HUD house. Mike: All that stuff is just derived from the government feeling the need to get involved to help America’s own homes, right?
Larry: Stimulate the economy, they’ll put people in debt. Mike: The American dream. Larry: Exactly. Mike: But the American dream isn’t to be enslaved in debt. They sell it at a little bit different way. Larry: I want to stimulate the economy and I’m doing my part by putting as many people in debt as I can. Mike: Yeah. So let’s talk about as an investor, let’s talk about that opportunity. Obviously, there’s a lot of ways to buy houses. You could advertise directly to home buyers which you still might to get those homes, right? But talk about how you kind of find HUD homes or where they’re kind of sold that. Larry: Well, the greatest part is is it’s all available at one place. There is only one place you can buy HUD houses and that’s hudhomestore.com. Hudhomestore.com. Now, they won’t let just investors like us bid, okay? All bids are submitted by a realtor, a state licensed realtor in the state where the property is located, state licensed realtor with what’s called an NAID number. That stands for National Identifier number.
Now, you can also as a nonprofit, if you have a nonprofit or you’re associated with a nonprofit, they can also get an NAID number or a government agency can as well. But for the most part, you’re going to use a realtor with an NAID number and they’re going to be submitting your bids for you. Mike: Okay. Talk about what are some of the advantages. Why would somebody want to target a HUD home because a lot of times, are they typically listed on the MLS as well, right?
Larry: Well, the thing I . . .
Mike: Or do they have to be or?
Larry: Well, they are listed on the MLS but quite frankly, I don’t know why because the listing agent doesn’t really do anything. But basically, they’re all at hudhomestore.com but they are also on the MLS. They all have a listing agent and they pay the listing agent and the buyer’s agent a commission. Now some of the reasons I love HUD houses is I’ve done direct mail, I’ve done bandit signs, I’ve done marketing, I’ve done all different kind of things.
I’m a firm believer. You need five to ten different ways to market at any given time. But with HUD, there are no phone calls, there’s no negotiating, there’s no direct mail, no bandit signs, no marketing, advertising, and no expenses. I have a zero marketing budget [inaudible 00:06:41] HUD deals. Mike: Yeah. I know you and some other folks I know that do this too. You can systematize it, right? You can basically buy from your desk instead of out meeting with . . . truthfully, the way I bought hundreds of houses or the way that I teach everybody is marketing and sitting at the kitchen table with somebody to buy houses.
Larry: That’s exactly right. Mike: So we got to look at a whole bunch of deals to get one and we got to build relationships with a whole bunch of different people that we’re going to build a relationship with one time and never see them again and you got to go through the dog and pony show a lot, right?
Larry: Exactly. With HUD, you’re not negotiating because I’m a firm believer. If you’re going to be a long time real estate investor and you’re going to get really good at it and you’re going to do it full time, you need to be a good negotiator. But with HUD, you don’t have to. There is no negotiating. It’s all done on the computer and HUD is a computer and you just put in your bid and then you wait and see what happens and there is basically several things that can happen. But some other things I love about HUD is most of them, not all of them because real estate is local, but most of them are listed below market value. Another good advantage is they always provide you with what’s called a PCR, property condition report. Now it’s not going to tell you if you need like paint and carpet or the counter top is messed up. However, it’s going to let you know the major things. The roof, the foundation, the HVAC, the wiring, and the plumbing. Those are all your major expenses. So you can look right on the PCR and you can see from an inspection exactly what was done and what passed and what didn’t. Mike: Yeah. Earlier you talked about what you need to do to be able to bid on properties but, and correct me if I’m wrong, don’t HUD houses typically, they’re only available to owner occupants unless they need a certain amount of repairs or tell me a little bit about that. Tell us about that.
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Don’t HUD houses typically, they’re only available to owner occupants unless they need a certain amount of repairs? Tell me a little bit about that. Tell us about that. Larry: Yeah. I’m really glad you brought that up. Now, it used to be in different areas of the country. It could be anywhere from 15 to 30 days. As soon as the property was listed, it was only available to owner occupied buyers. Now, as the market gets tighter, that number of days shorten and there’s no specific amount of days all over the country. I’ve seen some areas, I go and speak in California, Ohio, Texas, all around, and they might say 15, 35, 10, whatever. But now with the way the market is turned and it’s a hotter market, it’s a sellers’ market, I’ve seen consistently around 15 days. Now, I will tell you this though. I’ve seen a few areas and even in my own market where they don’t even hold them for owner occupied buyers any length of time. In other words, an investor could bid on it on day one.
Mike: Wow, okay. There is something about the property condition too, like if it needs over a certain amount of repairs that they . . . do they market it differently because obviously, a first time home buyer is not going to buy a house that needs $20,000 of foundation work first. Or they just don’t differentiate it?
Larry: Well, there’s what’s called insured and uninsured. You cannot get an FHA loan to buy a HUD house if it’s uninsured. Now, sometimes they also, if you’re getting . . .
Mike: They’ll tell you that, whether it’s insured or uninsured?
Larry: Right. That’s in the listing actually. So that’s in the listing. Mike: So that’s a sign to investors like hey, you allow your competition that could be a homeowner is gone, right?
Larry: Exactly. If it’s in good shape, in a good area, and it’s priced right, I mean listen, I’ve bought a lot of HUD houses at 50%, 40%, 30%, even 20% a list price. We had one not too long ago, I think it was listed for 45. We paid $8800 for it. I got one just last week. It was listed for 76 and we paid 26 which is 35% the list price and get this, here’s the best part. It was only on the market for 19 days. Mike: So let’s talk about bidding. I mean there’s got to be some strategy there. We’ll talk about maybe how you do it because I know you kind of do it in volume. It’s a major strategy for you but just in terms of, let’s not talk about volume here. Let’s just talk about how would you know how much to bid or because you’ve kind of taken the human element out of it, right? There’s no negotiating. So how do you know that you can get houses for that cheap relative from one house to the next I guess?
Larry: Well, I will tell you this. It’s difficult to tell exactly what they will take for a house. I mean listen, if we knew that then there would be no HUD houses left, everybody would know what to bid. But we have a couple of different methods and we can get into that as well but the thing that I found is I’m right here Mike in the Charlotte MSA, Charlotte, North Carolina. Although I’m in South Carolina, I’m right across the state line from Charlotte, North Carolina but it’s been about three plus years since I’ve bought a house in Charlotte. I like to buy the smaller town, smaller communities where people were born and raised. They have a sense of community, they have family ties there, they’re not going anywhere, and they want to live and raise a family and that’s where I buy most of my houses. In the big MSAs like where you are, I mean you know there’s a ton of competition, right?
Mike: Oh yeah. Larry: See, if you get out of those areas, you can get really good deals, not only deals but you can get steals, just like the one I bought for 35% just a couple of weeks ago and it had only been on the market for 19 days. I mean come on, it hadn’t even had a price reduction yet. Mike: So somebody at HUD is also looking at that saying, “Hey, this is in a more rural area. So we’re going to list it for this price but we’d be willing to take this because we know . . . ” I guess somebody is evaluating hey, the days on market out here in this small town are much higher than usual or the last one we listed, it took forever. Therefore they kind of set, I guess behind the scenes, they’re setting kind of a minimum acceptable price or something. Larry: Well, it’s not really much different than if Bank of America forecloses on a property. A HUD is going to hire an asset manager that’s going to hire a realtor to give him a BPO and determine what they think they could sell the property for. Listen, I don’t buy all the houses in the smaller towns, rural areas and all that, in fact, I’ve tried to stay away from rural. I want to be in smaller communities, bedroom communities of bigger areas but where there’s less competition.
The other thing that I’ve noticed is typically, now this last house I just told you about, it was on the market for 19 days, but typically what I’ve seen is there’re going to start coming down where they’ll take 50%, 40%, 30% around the 50, 60, 70 day mark and they’re not going to last that long in the big MSAs. Mike: When you put in a bid, like how long does it take to know that, hey, your bid has been rejected and then can you just rebid on it right away and raise your price? How does that work?
Larry: That’s awesome man. That’s great. That’s great. So when you put in a bid, one of three things are going to happen. Either they’re going to accept your bid, and HUD is a daily auction, every single day, opted on every house in North and South Carolina every single day. We’ve done deals in 12 different states but I focus on the Carolinas. But I’ve bid on every HUD house in North and South Carolina every single day.
Now, what happens is you put your bid in, by tomorrow, usually around by 3:00 at the latest, I’m going to have an answer back from the asset manager who is going to email the buyer’s agent that submitted the bid. We have assistants that we pay to work for the agent. They’re unlicensed assistants and they actually work for our buyer’s agent doing the work for the buyer’s agent.
So that way, the buyer’s agent doesn’t have to sit in front of the computer for two or three hours. We hire an assistant to do that and we pay him. The realtor is happy with that because they get a commission and they didn’t have to do any work. So they love it, right?
Mike: Yeah. Larry: So what happens is, if they don’t accept your offer, nothing happens. Your bid simply expires. It’s over. You’ll never hear from them again, you don’t have to contact them. Your bid simply expired. However, a little tip here, there’s a box on there. Whenever you submit your bid or whenever a realtor submits the bid for you, you want to check that little box that says, “Leave this bid open as a backup.” Now, you’re not going to get a ton of deals but maybe two, three, four, five, ten of them a year, they’ll come back and accept your bid as a backup because another deal fell through. But if nothing happens, your bid simply expires. Or they could counter your bid. They could counter. Maybe it’s listed at 50, you offered 10 and they counter back at 40 or 45 which is about typical. They’re going to be close to list price on their first counter. Or the third thing that can happen is they simply accept your bid. Mike: How often do they counter you versus you just not really knowing where to go from there, like you don’t really know how far off the mark you are?
Larry: Well, what I’ve found, Mike, is they counter a lot more now than they used to. I mean we have a whole system, we have a spreadsheet. The cool thing about HUD also, when you go and do your look up of the properties you want to bid on, you can export that as a spreadsheet and we export it into a Google docs spreadsheet that we have created and we merge the two together so we can keep track of our bids and the comps and links to Zillow and all that stuff.
So then we have a VA go in and analyze it, pulling comps, pulling rent comps, drive in the street, looking at the PCR, looking at all the pictures, and they put a number on it. Then we have five different bids. We have our max bid. Let’s say our max bid is $30,000.
So on Monday, our max bid is 30,000. On Monday, we’re going to be at 26, Tuesday, 27, 28, 29, 30 on Friday. On Monday, 26, 27, 28, 29, 30. It’s a little more detailed than that. It’s a percentage because it’s not an even number. We try to do an odd number anyway, but that’s very similar to what it is. So we do five bids five days of the week. Mike: Okay. Then you know the houses that somebody else wins. I guess they just come off your list. They are not even available to bid on any more, right?
Larry: Well, the other cool thing about it is the next day, if somebody, if they accepted a bid from somebody else, it won’t even show up on HUD’s website. They pull it right down from the website. Mike: Yeah. You can tell which ones are new I assume?
Larry: Yeah. You can tell days on market. You can also look at when they did their inspection. That’s another good indicator, when it was listed, how long the listing is for, all that good stuff. Mike: Well Larry, talk about kind of getting started doing this because obviously you’ve been doing it for a while, you’ve got a system, you’re bidding on two states. A lot of people that listen to the show are new or newer investors. We’ve got a bunch of veteran folks here because we’ve had so many rock star guests on here.
But if somebody wondered, if they’re looking to get started in real estate investing or they’re just maybe doing a few deals here and there and they don’t really have the resources that you have to be doing this en masse, I mean can they even compete against a big guy like you?
Larry: Well, you know what? I love that question because yes, they can compete because I’m a firm believer. I want your first deal to be a home run, not just a good deal but a great deal. I want it to be a home run. That’s very, very important. So they don’t have to compete against me because I’ve got a big office, I’ve got staff, I’ve got overhead, I’ve got assistance. I’ve got a lot of mouths to feed out of every single deal. Mike: I understand. Larry: So the guy out there watching this podcast, they’re watching the show, they could go out there and pick up a house for 25 and flip it for 30 and they’re going to make close to 500. If I get it for 25 and flip it for 30, I’m going to make about $400. So I’m buying and selling, I got closing department, I got all that stuff. For somebody just starting, I’ve got two different methods that we bid on a property. I tell people anytime they first start out, you want to start out with the shotgun approach. I have a shotgun and a rifle approach. The shotgun approach is you simply enter a percentage of the list price. Here’s an example and listen, real estate is local as I mentioned. All markets are different but here’s a typical type of example. Anything listed 50,000 or less, bid 25%, 25%, okay? 50,000 or less. If it’s 50 to 100, you might bid 35%. And 100 plus, you’re going to bid 50%.
Mike: Of the list price. Larry: Of the list price, of the list price. Mike: Then you said you kind of bid daily, you raise your bid a little bit daily, right?
Larry: Right. Well, whatever that number is, let’s say it’s 25% and the list price is 40, well, 25% is $10,000. So we might bid 6000, 7000, 8000, 9000, 10,000, Monday, Tuesday, Wednesday, Thursday, Friday, so as an example. Then what we do, this is the best way to get some momentum going, to get some volume going, you put your bids out there as a percentage and then you start working the counters because you’re going to get some counters.
When we get a counter, we’re going to go through there and analyze it, we’re going to drive the street on Google maps, we’re going to pull comps, we’re going to pull rent comps, we’re going to look at the pictures, we’re going to look at the PCR, we’re going to do all that stuff.
Now, we’re going to put an exact number on it. What can we pay for this property? Then we’re going to change our bid on our spreadsheet and the next day when our assistant comes in, they’re simply going to enter in the new bid. Mike: Yeah. And then you just said that so you’re going to look at the product condition sheet and all that. So originally, you’re not even doing that. You’re offering a price so low and I guess with a HUD home too, even if they come back and accept your bid, it’s not quite a done deal yet. You got to put it into a deposit, you’ve got to formally sign a contract, right?
Larry: Exactly. That is another good process about this whole thing. When HUD accepts a bid, you have two business days to get all the signed paperwork in and get your deposit. Now, HUD is very consistent on this. If your purchase price that they accepted is 50,000 or less, it’s a $500 deposit. If it’s over 50,000, it’s $1000 deposit. It’s that way all over the country. You have two business days.
Now, what they’re going to do if they accept your bid, they’re going to email your buyer’s agent and say you’ve got a bid accepted and they email them all the paperwork as well meaning the contract package. Now, there’s no due diligence period, there’s no inspection period. If you send them that money and you don’t close, you will never see that money again.
The only time you will ever see that money again is, and it’s rare, but it’s if they cannot close for some reason. Like we had one a few years ago where they had failed to do something correctly on the foreclosure or the attorney handling it did. So they had to go through the foreclosure process again. They didn’t serve notice correctly or something.
So they had to do that. They asked us, “Do you want to leave this bid open?” So yes we did. We said, “Just let us know.” So three months went by, six months went by, nine months went by. Finally, about a year later, we inquired about it and we’re still working on it. So we said just go ahead and cancel it and give us our money back. That took about another three or four months to get the deposit back. Mike: Well, hey Larry, I’ve got a question to ask you. This is actually a social question that we got from Facebook from Johnny Moore. I don’t know Johnny personally but I’ve seen him posting, he is actually not far from me here in Dallas. I’ve seen him fairly active on Facebook. But his question for you is so not necessarily HUD specific but you do a lot of investing, is, what’s the one thing that you think an investor could do to take their business from six figures to seven or eight figures. Larry: Awesome. In other words, what’s the one thing you could do to scale your business. That’s a great, great question. I’m sure you’ve talked about this before on FlipNerd is in any kind of business, when you go from being a one-man show to building an organization, in any organization, usually the founder is the visionary. The visionary needs an integrator. You know all about traction and rocket fuel and the EOS entrepreneurial operating system. You’ve probably even talked about it before. Mike: Yeah. We have. Frank, you know Frank, Frank Curtin, Frank has been on the show before. He’s actually an implementer for that. So yeah, go ahead. Please continue. Larry: That’s awesome. You guys need to listen to that podcast, watch that podcast as well. So it’s all about EOS, entrepreneurial operating system. So the visionary has the big picture. Where are we going to go, what’s the big grand goal? The integrator works on the day-to-day, what’s going on right now in the business. In other words, a visionary has got this big plan and goal, the integrator says, “Okay, well, this quarter, we can do this, this, and this. But we can’t do this, this, this, and this and here is the steps we’re going to do to get there.” That’s what we do. Candice is our integrator. She’s like a daughter to me. I love her to death and she’s phenomenal. She keeps everybody on point and on track, even me. Because I was telling them this morning in a meeting. I said, “Guys, I would love to be able to do this but I can’t stay focused for 12 minutes,12 days, or 12 months.”
Mike: Yeah. I know how that feels my friend so I get it. That’s awesome. That’s great. Yeah, I would say typically, this is one of the challenges that I teach people on all the time is as real estate investors, a lot of people leave their job or they do different things to kind of achieve this financial freedom, only to create a new job for themselves because they end up doing everything whether they’re good at it or not. They just are a one-man band or a one-woman band and there’s no way you can scale your business if you get yourself in that situation. Larry: That’s exactly right and you want to get to the point where your business is working for you, not you’re working in the business Mike: Yeah, absolutely. Absolutely. Well, a few more questions on the HUD houses, Larry. So one question I had is, because you do a lot of volume, do you get any favoritism over the small guy that’s just buying one here or there or trying buy? With a lot of things in this business, over time you build relationships, you build kind of a network that all ends up paying dividends for a long period of time. Does that come up in the HUD area at all?
Larry: I wish I could say they knew who I was. It maybe a little bit of privilege. I mean like, “Hey, I have taken hundreds of properties off your website for you.” I think they look at it just the opposite. If any little thing comes up, if I happen to send somebody out to look at a property or send somebody out to inspect or whatever, they’re all over us, they’ll be on our buyer’s agent about it if we do something wrong or whatever.
They’ll threaten to not sell you any houses anymore or threaten to not let that agent be able to submit anymore bids. So I would love to say that they give me some preferential treatment because we’ve hundreds of HUD houses but that’s not the case at all. Mike: Yeah. Well, and that’s good news for people that are listening that are trying to get started in this. You can’t say, “Well, I can’t ever match Larry Goins and his team.” The playing field is fairly level, right?
Larry: There you go, absolutely. There is no question about that. Mike: Well, for folks that are listening to this Larry that are like, “I want to go do this.” How do they even get started? I mean they could look at the MLS and see houses and say they’re a HUD home but and every real estate investor and their brother will say that they work . . . I’m sorry. Every real estate agent will say “I can do HUD homes” or “I could help you with that,” right? But clearly, there are some that are specialized in that area. But where do you even get started I guess?
Larry: Well, I’m really glad you brought that up. That’s kind of funny but we’ve actually sold houses to agents that have NAID numbers. I remember the first time we did this. This was years ago. We sold a house over in Kings Mountain, North Carolina and we put it out to our list, we put it out on social media, on our website, and stuff and an agent called up and said, “This house is listed . . . ” and it was something like 75,000. “How are you able to sell it to me for $40,000? It’s listed or it was listed for 75. How can you sell it for $40,000? I’m a realtor. I have an NAID number.”
My short answer is “Do you want it or not?” But it’s because we submit a lot of bids. You and I both know, if this was easy, everybody would be doing. Heck, if life were easy, we would all be skinny, happy, and rich. Life is not easy. It is tough. But I have simplified the process. If you will go through step by step by step, you can do HUD houses. It is literally the simplest, fastest, easiest way I’ve ever seen to buy properties and I buy a lot of HUD houses. It’s a big percentage of what we buy. Mike: Awesome. You have a book. I know you have some different training but you have a book that talks a lot about HUD houses, right?
Larry: Exactly. Mike: “HUD Homes Half Off.”
Larry: “HUD Homes Half Off,” available wherever books are sold. Mike: Awesome. Where would somebody get that book at Larry?
Larry: Well, we created a special website just for your listeners.
Mike: Awesome. Larry: Now, you can go and get it, you can pay for it if you want to at the bookstore, Amazon or whatever. But if you would like a free copy for FlipNerd listeners only, go to larrygoins.com, that’s G-O-I-N-S.com/flipnerd. Larrygoins.com/flipnerd and you can get an absolute free copy. Mike: Awesome. That’s very generous. We’ll add a link on the page here down below. Larry: That would be great. Also, it includes that spreadsheet I talked about as well that we merge everything with. That spreadsheet is included with the book. Mike: Awesome. Well Larry, what did we miss and what have we not talked about yet related to HUD homes?
Larry: Well, I don’t know. Maybe selling them?
Mike: We’ve covered a lot of stuff. Just to clarify, you’re taking ownership of this. So you’re not typically able to assign a HUD home. Is that right?
Larry: That’s a great point. You cannot assign a HUD contract. It’s as is, where is, no due diligence, no warranties, no guarantees, none of that stuff. But here’s what we do. Here’s what we do and this might be the missing piece right here. As soon as we get one under contract, we’re going to go through and we’re going to do all this stuff again. We’re going to analyze the property. We’re going to pull comps, we’re going to pull rent comps, we’re going to call the listing agent, we’re going to call the local property manager. Because see, it might be two hours this way or four hours this way. I don’t really know.
So we’re going to do that. We’re going to call an agent, call a property manager, go look at it if we can or drive the street online. We’re going to run the comps again, run the rent comps again. We’re going to look closely at the pictures. Is that a stain in the ceiling? Is this floor unleveled? We’re going to go through the PCR again. Some of them have what’s called a PCR summary and it’ll give you an estimate of the cost to cure the repairs. So we’re going to do that. We’re going to do all of our due diligence.
You can if you want to, if you’re brand-new, if you’re just getting started, you can do a rehab estimate. You can do a CMA, comparative market analysis done by an agent. You can get an appraisal, you can get an inspection. I don’t do any of that stuff. I don’t do any of that.
But then we’re going to start marketing the property. If we know we’re going to send in our deposit, we start marketing it right away. We send somebody out to take pictures. You can find somebody on Craigslist, you can find somebody at BPO photo flow, BPO photo flow. They’re just a field service rep, they work for asset managers and they go out and inspect properties.
You can also go to this website, wegolook.com, for about 30 or 40 bucks I believe it is. They’ll go out and look at anything and take pictures of it and send it back to you. Then what we do is we put signs all over the neighborhood. If I’m wholesaling it, I have a yellow sign that has a big red arrow on it and it says foreclosure and it has the phone number and it has a dollar sign and we hand-write in the price.
If it’s a $60,000, $70,000 neighborhood and we’re picking it up for 30 and wholesaling it for 40, when people see that sign that says “Foreclosure, 40,000,” they know it’s a $60,000, $70,000 neighborhood, they know it’s a deal and they’re going to call. The phone rings off the hook.
So we’re going to put signs, we put out about 20 signs for every property all over the neighborhood. We put them everywhere except in front of the house because we don’t own it yet. So we put them out in the neighborhood, we put them out in front of convenience stores, Walmart, CVS, all those different places and then the phone rings off the hook and we qualify the buyer. Are you a cash buyer, do you need financing, are you looking to buy something to live in, to rent out, to fix and flip, and then we know which direction to lead them in. Mike: Yeah. Do you have any restrictions on selling it to folks that need to get financing? I mean obviously you’re going to need to probably sit on it longer, but are there any restrictions on reselling a HUD home in terms of like seasoning if you will?
Larry: Actually, there’s only one requirement as far as seasoning and a lot of people get confused about this is the only time there’s a seasoning issue, meaning you have to hold the property for a certain length of time, say 90 days, is if you were selling it to somebody that’s going to get another FHA loan. Otherwise, you could buy it for $50,000 today and sell it this afternoon for 75,000 or 150,000. Mike: That’s not specifically a HUD home, a HUD house issue. That’s even when I buy houses from sellers, there’s a seasoning issue with FHA. Up until this past year, they kind of wave that. It wasn’t necessarily a requirement, but a lot of lenders still kind of followed it, FHA lenders, but now they do enforce that. So yeah, awesome.
Larry: Exactly. I’m glad you clarified that. Mike: Yeah, not necessarily just a HUD home issue. Awesome. Well, one of the things that we’ve done, because the market is so strong quite frankly is we’ve just started this one, because when we buy and sell houses, like I have a house earlier this week that we bought and we listed it the next day. I mean it was an as-is type house, it’s livable, it needs some updates but we’re doing a lot of that because the market is so hot and we just literally say, “No FHA buyers,” because I don’t want to sit on it for three or four months. The market is so hot that people can get conventional loans or they can find other ways to get money. So in a market like Dallas, a lot of pretty reasonable price home, probably, I don’t know, a percentage of the market was FHA loans but it was a lot relative to like California where the prices are a lot higher. People are probably using more conventional loans but now, we just flat-out say no FHA and haven’t really had any problems with it. Larry: There you go. That’s great. That’s great. But there’re so many different kind of loan programs available now. You don’t have to necessarily use FHA. But I love HUD houses because I’ve even paid more than list for houses. I know that’s not uncommon where you live, but in the Carolinas, it’s very uncommon to pay list or above list for a property because we just don’t have all that support pushing up the prices.
But I’ve paid 103% for a HUD house and I got it on the very first day it was available to investors. It was listed for 44,000, I paid 45,600 and just to try to get the house, I kept raising, what should I bid, what should I bid. The realtor said, I mean it was $100,000 house easily. I sold it for 89,900 and didn’t touch it. Did not touch it. Mike: Wow, that’s awesome. Well Larry, if folks want to learn more about you, I know you do a lot of training programs, you have a lot of knowledge and a lot of information on your website, where should they go to look you up?
Larry: Yeah. Just our website, larrygoins.com. We have a radio show called BRAG Radio. It’s all about investing to be rich and generous where we teach people how to invest and then help them to share their blessings with others of time and money. That’s why we call it BRAG, be rich and generous. BRAG kind of has a little negative thing but I like the sound of it. When people understand what you’re really talking about, they’re like, “Oh okay, that’s cool.”
Mike: Is your radio show, is that just in the Carolinas or can people listen to that online or?
Larry: Well, you can listen to it on iHeart Radio and it’s on the home of the Panthers, Carolina Panthers, WBT radio in Charlotte, and it’ll soon be syndicated on some other stations as well. But iHeart radio and we archive them at larrygoins.com. Mike: Okay. So you’ve got them all on your website there?
Mike: Awesome. Well, hey, Larry, thanks for joining us today. I really appreciate it and it was great information. We haven’t talked about HUD homes. We talked about it one other time in 335 episodes and that was actually with you, but that was almost two and a half years ago and you’re still trucking. Good to see you my friend. Larry: Man, it’s great to see you. Thanks so much for having me on. I really appreciate it. Mike: Yeah. Thanks for being on and Happy New Year. Everybody that’s listening, thanks for joining us for another episode. We’ve got hundreds of episodes that we just talked about. If you haven’t listened to the show for a while, welcome and check some more out. Otherwise, we’re going to keep bringing you some great guests like Larry and just subscribe to us on iTunes, subscribe to us on Stitcher Radio if you’re not an iPhone and not an Apple person. But I appreciate you and Larry, thanks again for being with us today my friend. Larry: Thanks a lot man. Have a great day. Mike: All right. Take care. Larry: Thanks. You too. Bye-bye. Mike: Thanks for joining us for this episode of the flipnerd.com investing show. If you’re not yet an elite member of FlipNerd, you’re missing out. We have tons of great training including a new detailed master class published each month and live training webinars with experts twice a month. Plus you’ll get access to all of our archives where we already have a growing library of master classes and other training videos.
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