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SHOW NOTES FOR EPISODE 127: BUYING HUD HOMES AT HALF OFF
Buying properties below market rates has a host of advantages, not withstanding, the creation of instant equity upon purchase. In this episode, veteran real estate investor and author Larry Goins shares “insider secrets” on how to purchase HUD homes, sometimes as low as 50% below market. Utilizing tried and tested techniques and systems developed over the last 30 plus years, Larry has created a successful real estate enterprise that continues to thrive today.
What You Will Learn
- What’s the difference between lease options and seller financing
- Why he hates rehabs, tenants and short sales
- What is “real estate day trading” and how it can generate profit for you in as little as 30 minutes
- Why he calls lease option tenants “home owners in training”
- How you can buy and sell HUD homes at 50% under-market
About Our Guest
Larry Goins
Larry H. Goins is a Real Estate Investor and Author who has been a real estate investor for over 20 years and travels throughout the United States speaking and training audiences at conventions, expos, and Real Estate Investment Associations on his strategies for buying and selling houses. His recent best-selling book is “HUD Homes Half Off.”
Between speaking engagements and mentoring other investors, Larry oversees the daily operations of his real estate investing business. Larry is committed to his strong core values and moral integrity. His personal and business motto is, “We put people and principles before profits.”
More About Larry
- Always had an interest in real estate
- Got started with a 3-day seminar taught by a guy named Tom Voos
- Got real estate license and general contractors license
- Has done most everything in real estate, including:
- Wholesaling
- Retailing
- Subject to
- Short sales
- Commercial
- Residential
- Multifamily
- Triple net lease
- Seller financing
- Lease options
Very First Deal
- In 1986, bought an SFR (3bed/2bath)
- FHA, non-qualifying, assumable loan
- Put up $500
- Rented it out for a few years
- Sold it a few years later with a wrap-around mortgage. Buyer bought $5-7,000 down. Made a spread on the mortgage and equity and eventually sold off the note for a profit
Misc Comments
- Today, he mainly does Seller Financing and Lease Options
- He hates rehabs, tenants (he doesn’t literally hate the tenants, just the work they generate for the landlord) and short sells
- He also does “day trading” of houses (wholesaling)
Passive Investing
Lease Options
- Larry likes this the most
- Not tenants but “home owners in-training”
- They have to do a certain amount of the repairs every month (approx. no more than $200 per month)
- They put down $3,000 to $4,000
- $700-800 per month
- Can exercise their option after a year or two and buy the property but very few do
- The higher the price of the property the more likely the tenants will buy (Properties over $100K – 50-75% of tenants will buy)
- He does some seller financing for 20 years at 9% interest
- Where he finds properties
- HUD (30-50% of list price)
- Not likely in major MSA
- His company bids on every HUD home in North and South Carolina every day in online auctions
Buying and Selling a HUD Home
- Example: He picks up a house online:
- $30,000 (at a deep discount)
- 3 bed/2 bath
- 1,200 sq ft
- Looks for places that are liveable
- Maybe needs just a little TLC – paint, landscaping (no major work)
- Advertises:
- “Owner Financing! Why rent when you can own?”
- “No Bank Qualifying! Your down payment is your credit!”
- Attracting people that don’t have the best credit.
- Qualifying tenants
- Credit score may not be the best but…
- To they pay for their housing well?
- Do they pay for their car well?
- If they do, they may have a chance
- Selling it
- Sell for $69,900 or $79,900 “as-is”
- Comps in the area are $80-90K
- 10% down (will apply to purchase price “if they close”)
- You need to comply with Dodd-Frank and CFBB and can only sell to people who have the “ability to pay”
- Sell on “land contract” or “lease option”
- Lease Option
- $850 per month
- $10K down
- Larry covers taxes and insurance
- Have 12-24 months to refinance
- He wants to offer a “fit and safe” home with no plumbing, wiring or HVAC issues (minimal repair issues because Larry has to pay everything above $200)
- Seller Financing
- Sold at $99,900 “as is”
- $10K down
- Finance $89,900 at 9% for 20 years (full amortized)
- Payment: $950 per month (includes tax and ins) – handled by third party servicer
Passive Money Opportunities
- Most passive is lending to him to finance properties they buy
- He does hard money lending – 6-12 month terms
- Get your money back in 5-7 years or short term 30-60days
- Pays 8% return on private money
Real Estate Day Trading
- Wrote a book – “Getting Started in Real Estate Day Trading”
- Virtual wholesaling
- Buy and sell houses in one day – “can buy at 10am and sell at 10:30”
Biggest Mistake
- Trying to do it alone
- Real estate is a “team sport” – You need:
- A good closing agent – attorney or title company
- Good agent
- You also need “deal flow” and capital – got to have a way to find deals and a way to fund deals
- Go to market the properties to sell the properties
- Need to get educated – don’t get paralysis analysis
Biggest Successes
- Building his current team of employees
- Automating and systemizing his business
Advice for Old Dawgs Interested in Real Estate Intesting
To make money at real estate investing you need to know how active you want to be
- Passive
- Be a private money lender to investors and yield a fixed return
- Active
- Learn how to day trade, buy and sell houses or do fix ‘n flips
Overview of Buying HUD Homes
- Simplest, easier way to get deals on homes
- All deals online
- Can bid every day
- You need an agent to submit bids
What’s in the Future for Larry’s Business
- He actually has multiple businesses and is seeking to expand and grow each segment
- Real Estate
- Wholesaling and Day Trading
- Lease Options
- Education – teaching, coaching, events, courses, books, etc.
- He is especially excited about is radio show on WBT Radio show in Charlotte, NC (Saturdays at 4pm) – B.r.a.g. ( Be Rich And Generous) Radio where he shares ways to be successful so you can bless others
Rap-It-Up
- Favorite real estate book: Loopholes of Real Estate by Garrett Sutton
- Favorite business book: The 10X Rule by Grant Cardone
- Most valuable web site(s) for success (other than your own): Zillow and HUDhomestore.com, HUDhomevalue.com
- Favorite app: Audible
- Favorite quote: “People and principles before profits.” Truitt Cathay, founder of Chik Fil A
- If you had to start all over, knowing what you know, and you only had $1,000, what would you do to launch your real estate investing business: He wouldn’t need the $1,000 because he knows how to do deals without money. Would add to it to make bids on HUD houses and run with it.
Get a Free Book from Larry
- Larry is giving away a free book to all old dawg listeners entitled, “HUD Homes Half Off”
- www.Freehudbook.com/olddawg
How You Can Reach Larry
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