6 Keys to Cracking The HUD Code Insider

6 Keys to Cracking The HUD Code: Insider Hacks Learned from Over 200 HUD Flips

HUD Hacks: Finding Hidden Equity Today’s Agenda 1. Why HUD? 4. Manage Your Counter Offers 2. Manage your Daily Bids 5. Extra Due Diligence 3. Bid for Counteroffers NOT for the Winning Bid 6. Breaking common HUD Myths 2

HUD Hacks: Finding Hidden Equity Key 1: Why HUD? Advantages of purchasing a HUD Home 5 Small EMD ($500 or $1, 000) 2 Downloadable Inventory at www. hudhomestore. com 6 Automate & manage Daily Bids + Counteroffers 3 Negative stigma (i. e. , Sinkhole, Asbestos Property) Less competition 7 Frequent Price Drops 4 Not all Brokers have an NAID# Less Competition 8 No 90 -day deed restrictions 1 Lower hanging fruit among the 55 acquisition techniques 3

HUD Hacks: Finding Hidden Equity Key 2: Manage Daily Bids: Finding a HUD approved Broker To Make a Bid Need a HUDRegistered Broker 4

HUD Hacks: Finding Hidden Equity Key 2: Manage Daily Bids: NAID Application If Broker isn’t HUD Registered Get Registered! 5

HUD Hacks: Finding Hidden Equity Key 2: Manage Daily Bids: NAID Application 1. 2. 3. 4. 5. 6. Form 1111 – Original + Copy (with Original Signature) Form 1111 A – Original Signature IRS Document reflecting Business Name + EIN Copy of RE Broker’s License w/ Expiration Date Copy of Driver’s License w/Expiration Date Recent Utility Bill / Bank Statement 6

HUD Hacks: Finding Hidden Equity Key 2: Manage Daily Bids: Daily Schedule DO NOT BID DAILY • • • Wastes everyone time Different counties on different days Don’t base bids on “Net to HUD” C/O % (i. e. , 3 bed homes = 57%; 4+ bed = 65%) Don’t create your own Delusion START BIDS ON SUNDAY • Bid on 1 HUD house 1 time NIGHT always receive a • acceptance” V. A. s prefer to counteroffer until “provisional orwork sold during day • Most of available • If property comes out of contract # receive properties counteroffers again until “provisional acceptance” • Few investors or sold • Pluck properties on Monday morning 7

HUD Hacks: Finding Hidden Equity Key 2: Manage Daily Bids: Input Information for daily HUD List 8

HUD Hacks: Finding Hidden Equity Key 2: Manage Daily Bids: Convert your daily HUD Bids from this… 9

HUD Hacks: Finding Hidden Equity Key 2: Manage Daily Bids: To This! 10

HUD Hacks: Finding Hidden Equity Key 2: Manage Daily Bids DO NOT “BID TO WIN” • Wastes time • Different counties on different days • Don’t base bids on “Net to HUD” C/O % (i. e. , 3 bed homes = 57%; 4+ bed = 65%) Don’t create your own Delusion BID FOR COUNTEROFFERS • Artificial Bid • Always receive C/O until property is pending or sold • C/O $ Drops • Correlation to DOM • Hidden Equity “% OF AS-IS” COLUMN = Counter Offer $ / Original List $ Do not confuse with Net to HUD % START BIDS ON SUNDAY NIGHT • V. A. s prefer to work during day • Most # of available properties • Few investors • Pluck properties on Monday morning 11

HUD Hacks: Finding Hidden Equity Key 2: Manage Daily Bids New Column Headers “% of As-Is” Column “Original List Price” • HUD Bid submission/acknowled gment page • Cut and paste data “Hidden Equity” Column • Cannot solely rely on HUD’s counteroffer % • Based on Original List Price 12

HUD Hacks: Finding Hidden Equity Key 2: Manage Daily Bids: Add 4 new Columns 13

HUD Hacks: Finding Hidden Equity Key 2: Manage Daily Bids Visualize Your Bids Eliminate Columns because it Wastes Space A) “State” B) “Bid Open” Date C) “Listing Period” Color Coordinate Columns Uninsured Properties are in Red 14

HUD Hacks: Finding Hidden Equity Key 2: Manage Daily Bids: Eliminate these Columns 15

HUD Hacks: Finding Hidden Equity Key 2: Manage Daily Bids What to look for? Look for at least $35 K in Hidden Equity 30% - 70% for “% of As-Is” column Allows you to quickly find the Hidden Equity that you would have otherwise missed had you only looked at the C/O price (“Net to HUD”) a. k. a “% of Current List” Price 16

HUD Hacks: Finding Hidden Equity Key 2: Manage Daily Bids: Add New Columns & Color Coordinate 17

HUD Hacks: Finding Hidden Equity Key 3: Bid for Counteroffers – Collect important Data Daily C/O Spreadsheet 1) 2) 3) 4) 5) Day of the Week HUD Case # Date of Counter Offer Bid Date Net $ to HUD / Counter Offer $ 18

HUD Hacks: Finding Hidden Equity Key 3: Bid for Counteroffers – Collect important Data Daily C/O Spreadsheet 1) 2) 3) 4) 5) Day of the Week HUD Case # Date of Counter Offer Bid Date Net $ to HUD / Counter Offer $ 19

HUD Hacks: Finding Hidden Equity Key 4: Manage Counteroffers – Daily Counteroffer Sheet Master Counteroffer Sheet 20

HUD Hacks: Finding Hidden Equity Key 4: Manage Counteroffers – Look for the Hidden Equity 21

HUD Hacks: Finding Hidden Equity Key 4: Manage Counteroffers – Look for the Hidden Equity 22

HUD Hacks: Finding Hidden Equity Key 4: Manage Counteroffers – Look for the Hidden Equity 23

HUD Hacks: Finding Hidden Equity 1970 Alexandar Drive Titusville, FL 3/2/2, 1253 HSF, 1984 ARV: $130, 000 24

HUD Hacks: Finding Hidden Equity 1334 W Kenmore Drive Citrus Springs, FL 34434 4/3/2 2910 HSF, 2 Story, 2007 ARV: $170, 000 25

HUD Hacks: Finding Hidden Equity 8168 SW 56 th Court Ocala, FL 34476 3/2/2, 1938 HSF, enclosed pool, 1990 ARV: $199, 000 26

HUD Hacks: Finding Hidden Equity 7498 Timberlake Avenue Spring Hill, FL 34606 3/2/2, 1820 HSF, enclosed pool, 1984 ARV: $150, 000 7498 Timberlake Ave, Spring Hill, FL 34606 27

HUD Hacks: Finding Hidden Equity 1535 Sabra Drive Brooksville, FL 34601 3/2/2, 1254 HSF, 1965 ARV: $120, 000 7498 Timberlake Ave, Spring Hill, FL 34606 28

HUD Hacks: Finding Hidden Equity 273 Breckenridge Circle Palm Bay, FL 32909 4/2/2, 2236 HSF, 2005 ARV: $199, 900 7498 Timberlake Ave, Spring Hill, FL 34606 29

HUD Hacks: Finding Hidden Equity 4770 NW 64 th Street Ocala, FL 34482 3/2/2, 1404 HSF, enclosed Pool, 1990 ARV: $150, 000 7498 Timberlake Ave, Spring Hill, FL 34606 30

HUD Hacks: Finding Hidden Equity Key 5: Extra “Due Diligence” w/o extra “EMD” Submit Multiple Offers Tie up a HUD Home for an additional minimum of 7 -12 days without giving any EMD always knowing that you are more than likely the “Next Highest Bidder” Submits offer $X. 02 over “Net to HUD” in Company Name 1 Submits offer $X. 01 over “Net to HUD” in Company Name 2 31

HUD Hacks: Finding Hidden Equity Key 5: Extra “Due Diligence” w/o extra “EMD” After Receiving “Provisional Acceptance” Email” • • Submit the HUD Package, but deliberately miss an initial / signature (Asset Managers still give you two 48 hour periods to make corrections); HUD Appraisals In July 2014, HUD no longer gives HUD Appraisals for executed contracts But here’s a work around Locate white sign-in sheets • Locate the Appraiser and contact him/her • Ask for Appraisal If you don’t want the house Don’t correct + EMD still refundable 32

HUD Hacks: Finding Hidden Equity Key 6: Breaking HUD Myths 1. Winning Bid always equals [Net Counter Offer] x [1. 06%] FALSE 2. Current List Price is always Appraised Price FALSE 3. “% Net to HUD” is the best metric to gauge a HUD property FALSE 4. If you are a Realtor representing your Acquisition Entity, you can still receive commissions? FALSE 33

HUD Hacks: Finding Hidden Equity Key 6: Breaking HUD Myths: Point 1 – Winning Bid Myth 34

HUD Hacks: Finding Hidden Equity Key 6: Breaking HUD Myths: Point 1 – Winning Bid Myth 35

HUD Hacks: Finding Hidden Equity Key 6: Breaking HUD Myths: Point 1 – Winning Bid Myth 36

HUD Hacks: Finding Hidden Equity Key 6: Breaking HUD Myths: Point 2 – Initial List Price 37

HUD Hacks: Finding Hidden Equity Key 6: Breaking HUD Myths: Point 2 – Initial List Price 38

HUD Hacks: Finding Hidden Equity Key 6: Breaking HUD Myths: Point 2 – Initial List Price 39

HUD Hacks: Finding Hidden Equity Key 6: Breaking HUD Myths: Point 3 – % Net to HUD 40

HUD Hacks: Finding Hidden Equity Key 6: Breaking HUD Myths: Point 4 – Representing own Entity as Realtor 41

6 Keys to Cracking The HUD Code: Insider Hacks Learned from Over 200 HUD Flips Any Questions? Dohyun Kim (“DK”), Esq.