What are HUD Homes?
The United States Department of Housing and Urban Development, or HUD, is a federal department that administers federal programs that deal with better housing and urban renewal, including affordable housing. Usually when you hear the term HUD homes it is in reference to homes for rent in which the owner has agreed to receive rent subsidies from the government in addition to receiving a reduced rent payment from a renter that wants to reside there. On other occasions, HUD homes refers to a property that’s totally owned by HUD and for sale at an inexpensive price.
Investing in HUD Homes
There are several ways of investing in HUD homes. For a good long-term strategy you can purchase a home and rent it out with guaranteed subsidized payments from the government. You could also purchase a home from HUD at a good price and fix it up to flip. Just remember when purchasing HUD homes, you have to evaluate them just like any other real estate investment. If it will be a rental, you have to do the math to discover if you will have positive cash flow. If you plan to fix it up and offer for sale it, be sure there is sufficient profit after the cost of repairs and closing costs. Remember: just because they are HUD homes doesn’t mean that they are a great deal, do your homework.