What a HUD House is and How to Buy Them at a Discount

Episode 63:

Larry Goins is a Visionary, CEO, Entrepreneur, Real Estate Investor, and Educator. Larry has been investing in real estate for over 20 years.

Previously, Larry served as president of the Metrolina Real Estate Investors Association in Charlotte NC, a not-for-profit organization that has over 350 members and is the local chapter of the National Real Estate Investors Association.

Larry is an active real estate investor 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. Larry has also written several books on real estate investing that are available wherever books are sold. Larry and his assistant Kandas are also the hosts of the BRAG Radio Show. BRAG is all about using real estate to Be Rich And Generous.

Between speaking engagements and mentoring other investors, Larry oversees the daily operations of his investing business that wholesales properties, seller finances properties and holds properties for investment.

On a personal note, Larry and his wife Pam have two children, Linda and Noah. He also has a grand daughter, Ember. They are members of New River Community Church in Lake Wylie, SC. As a husband, father, businessman, and real estate investor, Larry holds true to his core values and moral integrity. His personal and business motto is, “People and principles before profits.”

What you’ll learn about in this episode:

  • Larry’s book: “HUD Homes Half Off!”
  • What a HUD house is and how to buy them
  • What criteria to search for on the HUD website
  • Why the best HUD houses are in smaller towns
  • Why Larry loves mobile homes and why they work great within the owner finance model
  • Larry’s strategy for bidding on available HUD houses and how he uses VAs to implement
  • Some of the benefits of HUD houses like no deed restrictions
  • Why you should bid on all HUD houses and not just the ones that fit into specific criteria
  • What happens when you are given a counter offer
  • How to handle the HUD paperwork after a bid is accepted



Welcome to the Real Estate Investor’s Summit podcast. Coming to you straight from the smallest big town in Texas, with your host, mentor and owner financing master, Mitch, AKA Be The Bank Stephen. The possibilities of life without a J-O-B start here. So grab your pen and paper and listen up.

Mitch Stephen: Y’all just might figure out how to fail forward to financial freedom. This is Mitch and welcome to the Real Estate Investor’s Summit podcast. We have a terrific guest today. He’s done virtual wholesaling, owner of financing, lease options and then he coined the phrase “Real Estate Day Trading.” And that has to do with wholesaling all over the country. He is a super, super intelligent guy. Been in the business a long time. He’s from Lake Wylie, South Carolina, just across the border from Charlotte.

Today we’re going to be talking about HUD homes and how to get HUD homes half off. That’s 50, 40, 30 percent, even 20 percent, off in today’s market. Right now, let’s hear it from our sponsors and we’ll be right back with Mr. Larry Goins.

Mitch Stephen: Alrighty, alrighty. I love my sponsors. They are great people. That’s why they’re there. If they weren’t good, they wouldn’t be there. So I highly recommend them, all of them, if you hear them on this show.

And today, we’re gonna be talking about HUD homes and we’re gonna get you some Larry Goins. Larry Goins, how are we doing today?

Larry Goins: Man, I’m phenomenal. What’s up Mitch? How you been?

Mitch Stephen: Been a long time. I saw you one time at a show in Florida. And then I hadn’t seen you since and I don’t travel all that much. I’ve been doing everything kind of virtual and online and Skype and all this stuff. But you’re traveling around the country pretty much these days, aren’t you?

Larry Goins: I do, probably not as much as I used to. Years ago, I was away more than I was at home, it seemed like.

Mitch Stephen: Larry, we don’t do anything as much as we used to.

Larry Goins: But we’re as good once as we once was, Right?

Mitch Stephen: Right. We’re as good once as we ever was.

Larry Goins: Exactly. I knew it was something like that. So you’re from Texas, so you like both kinds of music, Country and Western.

Mitch Stephen: No. Everyone says Western. It’s like Roy Rogers time. No one listens to that anymore. Well, I guess somebody does, but I do love my Country.

So tell us. You’ve got a book that you wrote on HUD homes half off, right?

Larry Goins: Yeah. I’ve got a book or three, but I picked the one we’re gonna talk about today. It’s called, “HUD Homes Half Off.” It’s all about buying HUD houses for 50, 40, 30. I’ve even bought HUD houses for 20% of list price.

Mitch Stephen: In today’s market?

Larry Goins: In today’s market. In fact, just recently, we picked up more than 35% of list price. And it had been on the market for 16 days. Could you believe that?

Mitch Stephen: See? This is incredible because I’ve tried this and it seems like I always get cut off somehow, and I can’t put my bid in or something. So we’re gonna learn about this stuff. But you did say you wrote some other books. Can you tell us the title of the other books please so …

Larry Goins: Absolutely. Absolutely. The first book I wrote was called, “Getting Started in Real Estate Day Trading: How to Buy and Sell a House The Same Day Using The Internet.” We’ve actually done deals Mitch in 12 different states, right from my office in Lake Wylie, South Carolina, right across the state line from Charlotte.

Yeah, so we’ve done as many as I think it was 103 deals a year, a couple years ago. But yeah. We’ve done them in 12 different states and I love doing real estate. In fact, I love everything about real estate except three things. There’s only three things I hate about real estate: rehabs, tenants and short sales. Outside of that, I love real estate.

Mitch Stephen: Rehabs, tenants and short sales. I’m with you there. I’m with you.

Larry Goins: Now I was gonna say, I can say this because I am a licensed general contractor. Which, in my opinion, gives me the right to say this. But I’ve always said, what’s the first three letters in contractor?

Mitch Stephen: C-O-N baby. Con.

Larry Goins: It’s just like anything else. There’s good and bad in everything, but you know. It makes for a good joke anyway.

Mitch Stephen: And well, more times than not, it’s true. There’s a reason why they say it. I mean, you gotta be careful because you know, you make your money when you buy it, and you lose it in the rehab to the contractors. And so you gotta be careful.

Larry Goins: I’ve said that for years too. That’s awesome.

Mitch Stephen: I think the greatest strategy in all of real estate, is to buy it, don’t fix it, owner-finance it for double, and watch the guy that’s making you payments. Go over budget fixing up your collateral. I think that’s the greatest strategy in the world.

Larry Goins: They’re just increasing your equity.

Mitch Stephen: Right.

Larry Goins: When you get it back.

Mitch Stephen: Well, if you get it back, you have increased equity, but it’s just a comfort and you can sell notes really easy if someone adds $30,000 to the value, you know. Not that I endorse selling notes myself. I want to collect as many notes as I can these days. After a certain amount of money, per month, coming in, you really can’t eat or drink anymore. So, unless you want to have an entourage and a Learjet, you just keep all those notes. You know?

Larry Goins: Exactly.

Mitch Stephen: So, talk to us about this HUD. How in the world are you getting … I mean, I always thought in HUD, that you know, first it went to the prospective owner/occupant. Then, after a certain amount of days, you as an investor, could bid on the house. So, how are you doing this? Give us a clue.

Larry Goins: Yeah, first of all, let’s kind of start out. Some people, believe it or not, some people don’t even know what a HUD house is. A HUD house is basically where somebody foreclosed, or somebody got an FHA loan and they stopped paying. Okay? They got an FHA loan, and they stopped paying. And, FHA doesn’t make loans, FHA just insures loans. Like, Bank of America might have made the loans. FHA’s underwriting that line and a portion of their payment every month went to an FHA insurance premium, paid by the borrower. And then when the borrower quit paying, Bank of America contacted HUD and said “Hey, my borrower quit paying, I need you to buy this loan back.” And that’s exactly what happens and then FHA forecloses on it and once they foreclose on it, it becomes a HUD house.

Now, the first 15 days, technically the first 15 days. Now, I’ve seen it at least a zero in today’s market. So, sometimes they open it up to investors right away, but typically, the first 15 sometimes as long as 30 days, it’s only available to owner occupied buyers. Because HUD, they want to promote home ownership, so they want to try to sell it to an owner occupant if they can right off the bat if that makes sense.

Mitch Stephen: Nothing makes sense that the government does, but yeah I understand. So, and HUD buys the house back from the lender.

Larry Goins: They buy the loan.

Mitch Stephen: Yeah, they buy the loan back. At what percentage? I mean 80 percent?

Larry Goins: They make the lender whole and there may be a percentage on it. I don’t know what that is, but then the lender is out of the deal. The lender’s totally out of the deal, okay? And then its HUD that is going to foreclose on the property. And once HUD forecloses, then they hire their asset manager. Every state has HUD approved asset managers that are going to dispose of the property. They hire a local realtor … You know, a couple of the advantages that I love about HUD houses is, there’s no phone calls in buying them, there’s no negotiating. You know like, you get on the phone, you’re trying to sell the seller or you’re talking to the realtor. You don’t have to worry about direct mail. You’re not using bandit signs to try to get deals. You know? There’s no marketing needed. Everything is done online, okay? Everything is done online.

Mitch Stephen: Are you bidding on these?

Larry Goins: Yeah, yeah, yeah. All the bids are done at this website: HUDhomestore.com

Mitch Stephen: HUDhomestore.com?

Larry Goins: Absolutely. That’s the only place in the world you can buy a HUD house in the U.S. and even Puerto Rico, the U.S. Virgin Islands, even Alaska.

Mitch Stephen: Wow so you could even buy a house in Puerto Rico or the Virgin Island, huh?

Larry Goins: You can, absolutely. Absolutely. You can buy a condo on the ocean from HUD in Puerto Rico.

Mitch Stephen: Man, I didn’t know that. I learn something everyday Larry Goins. Hey, everybody listen. You get in contact and get your free copy of HUD Homes Half Off at 1000houses.com/hud all lower case. Is the website HUDhomestore.com? Is it cumbersome? Is it so impersonal that … I guess it’s not frustrating for you.

Larry Goins: Not at all man, not at all. It’s great. Now, there’s probably the most difficult part that your average or newbie investor has to go through is, all bids are submitted online at HUD home store by a realtor, with what’s called a n-a-i-d number. That stands for national identifier number. And typically, the brokerage, the one that has the number … It’s not hard to find a realtor that has access to an n-a-i-d number, but you and I; unless we are a realtor with an n-a-i-d number or unless we are a nonprofit or government agency with n-a-i-d number, then we cannot bid on HUD house. So what we have to do is, we have to create a relationship with an agent that will submit our bids for us.

Mitch Stephen: That’s not hard though.

Larry Goins: No, no, no it’s really not hard. It’s an obstacle for some people, but what we end up doing is we end up building a relationship with an agent and telling them that, hey we’d be glad to hire them to submit those bids for them. So basically, they do no work, but they get comish.

Mitch Stephen: See, I told you it wasn’t hard.

Larry Goins: Yeah, there you go.

Mitch Stephen: You just figure out the angle.

Larry Goins: Exactly.

Mitch Stephen: There’s a lot of people out there that don’t like to work for money.

Larry Goins: Exactly. Hey, yeah, I mean think about this. You’re going to get paid when we do a deal, but you don’t have to do any of the work. Ah-ha, hey, right?

Mitch Stephen: Yeah, we just need to ride your license or your identification number, in this case, the n-a-i-d number.

Larry Goins: That’s exactly right.

Mitch Stephen: And so, how many bids are you putting out to HUD a month? When you’re rolling and it’s cranking, how many bids are you putting out in a month?

Larry Goins: Okay, that’s a really good question. Well, first of all, what you want to do when you go the HUD website. You want to only search for the properties that are available for investors. Okay? Any given state. It might be anywhere from 50 to 2 or 300 at any given time. Okay? That are available to investors. And you can search by city, by the entire state, by the county. Then you can have a search criteria. Like say, you only want to bid on houses that are listed for 100,000 or less, only houses that are at least three bedrooms or only houses that are at least 1,000 square feet or whatever. You can set up your search criteria. So, how ever many you bid on depends on what your criteria is.

Me, I personally bid on everything in North and South Carolina every day. I don’t really care what city it is. I don’t care what county it is. I’m looking for a deal. And I’ll be the first one to tell you, to get the great, great deals with the least amount of competition at 50, 40, 30 even 20 percent of list price, it’s not going to be in DSW. It’s not going to be in Houston. It’s not going to be in Charlotte, North Carolina. It’s going to be in Parkton, North Carolina. It’s going to be in the small towns. And that’s okay because, personally, and you know this Mitch, when you selling the financing, you have a better quality buyer that’s more stable and was born and raised in a small community. They have family there, they have ties to the community and it’s where they were born and raised and they want to raise a family there. So they’re a better long-term buyer as far as owner financing goes anyway. Am I right?

Mitch Stephen: That’s a terrific point, yeah. You are right. And people ask me, Larry all the time like “Well, what part of town do you buy houses in?” And I always tell them “I buy houses in the half-priced part of town. Why you know something?” And so you’re just taking it to state-wide. When we ask Larry Goins, “Where do you buy houses in the state?” he says that he buys them in the half-priced part of the state.

Larry Goins: Exactly. I buy where I can get my offers accepted. I mean, think about this. I’m right near Charlotte, North Carolina.

Mitch Stephen: That’s expensive real estate right?

Larry Goins: Yeah! It’s been over three years since I bought a house in Charlotte. And why do you think that is? There’s two groups here. Each one of them has a couple hundred members Why am I going to go out there and bid against these people, talk to other sellers as well? I have three other investors that offered me more than that. When I can go into a smaller town, yeah, there’s less buyers there when I go to sell the property, but …

Mitch Stephen: Here’s the good news Larry. You only need one.

Larry Goins: You only need one. You’re absolutely right. You and I got a lot of the same philosophies. How many buyers do you need for a house? One. One. I just took back a house with owner financing. It was a HUD house. It was a double-wide mobile home. I don’t know how you feel about those, but I love double-wide mobile homes.

Mitch Stephen: Deals on wheels baby. I call is wheel estate.

Larry Goins: There you go. That’s awesome. See, in Charlotte, if I wanted to spend 25 or 30 grand on a house, it’s going to be a 900 square foot, two, maybe three bedroom, one bath. It’s going to be about 20 feet to the next house. It’s going to be in a rougher part of town. It’s going to be built in the 30’s or 40’s. It’s going to need upgraded plumbing, wiring, old insulation, you know wood siding, you know 900 square feet. But, in a smaller town, I could pick up for 25 or 30 grand. I could pick up a 2001 maybe even a 2003 or 4 double-wide mobile home. 1800 square foot, three or four bedroom, two or three bath. Vaulted ceilings, plant shelves, island in the kitchen, a deck and on an acre of land. And in a small town where people want to live. And that’s why love it.

Mitch Stephen: You’re a 100 percent right. Larry, I’ve done hundreds of mobile homes and a lot of times, when I do mobile homes, it’s when the prices of houses get too high and I just take a left turn right into mobile homeville. Nobody cares about mobile homes. And you know why? Why they’re so down trodden, is no one will finance them. Well guess what Larry and I do for a living? We owner finance houses or do lease options. I don’t do lease options, Larry does. But the point is, we solve the issue of the home and, therefore, the price goes right back up to whatever the rents were. You know you back into the rents to arrive at a sales price.

Larry Goins: That’s exactly right.

Mitch Stephen: And I like double-wides better than single-wides, but everything for a price, right Larry?

Larry Goins: Absolutely, I was getting ready to tell you about one I just literally took back. A double-wide mobile home. I think I have about 30 maybe 33 in it. The first time I sold it, I sold for 69-9 and I got 5,000 dollars down. And I just got it back and I happen to ride out and look at it. You know, I wanted to see this one and you know, I do this every once in awhile. Not that I do it all the time, but I went out to take a look at this one and I’m like “Man, this house is not in that good of shape.”

But I paid a contractor to come in here and do a little bit of stuff, you know, so I was a little concerned that I wouldn’t be able to sell it again. Although, I put all my signs out, but this time I put out signs for 79-9, 800 dollars a month. The payment before was like 650 or 7 or something. And I’m like “Man, this is going to be a tough sale. It’s out in the middle of nowhere.” Going through the calls, we found somebody, they want to put 20,000 dollars down on this house. And I got 33 in it. I’m like man, like you said, you only need one right?

Mitch Stephen: That’s right and that’s the other reason why I like owner financing homes instead of buy and hold and becoming a landlord. Because when’s the last time you got a 20,000 dollar non-refundable deposit as a landlord? Never, so.

Larry Goins: Exactly.

Mitch Stephen: This owner financing thing can have some real upside, and on a good day, can have tremendous upside. So, do they have land home packages? That’s what we call them down here which is a mobile home, which is attached to the land. Does HUD have land home packages in their offerings or not?

Larry Goins: Absolutely, absolutely. In fact, that’s all they have where the mobile home title has been surrendered. There is not more mobile home title. You have your attorney submit the application to the department of motor vehicles, DMV they call it over here, and they surrender the title. So, now the mobile home becomes real property just like a single family house and it’s taxed that way. But it must be on a permanent foundation. You know, the wheels have been removed, the tongue has been removed and it’s on a brick foundation. In fact, those are some of the requirements to be able to get a HUD or FHA loan. So, you know if you’re buying it from HUD, it already meets FHA guidelines.

Mitch Stephen: Yeah and this is important because, you know I mentioned before. You can get mobile homes on much more land, a lot cheaper because the problem is financing a used mobile home. So if you have the wherewithal to find the money to buy it for cash or borrow it from a private lender, then the buying side’s solved. But then a lot of people won’t buy them even if they have the capability. They won’t buy the mobile homes because they’re not going to be able to find someone with cash to buy it from them. There’s not hardly any lending institutions that want to lend on a mobile home unless you have perfect credit. And most people I find that have perfect credit are not buying mobile homes. Do you find that Larry?

Larry Goins: Absolutely, absolutely.

Mitch Stephen: Okay, so what happens is, you have to owner finance this house or you have to arrange for financing for you buyer. That’s what Larry and I appreciate so much about owner financing is, we don’t need the banks. We buy with our own cash or with private money and then we owner finance and create the loan for our buyer. Where was the bank in that scenario? And that’s why we’re still in business when the recession hits. Because the first thing to close shop when the recession hits is the bank. Especially when it comes to a loans on mobile homes and little chunky real estate pieces. And we don’t need the banks and that’s why in the recessions, we can boom. We actually do better in recessions than we do in the good times because when the banks close down, we’re still open.

Larry Goins: Yeah, nobody else is selling houses or financing houses. You know, and I don’t mean this in a bad way and I don’t want any model that sets the person up to fail, but the reality is, is some of them, sometimes a lot of them, will fail out. Being they quit paying and you get the house back and you get to sell it again. Notice I didn’t say have to. You get to sell it again.

Mitch Stephen: Yeah, it’s a privilege. And I really like what you said. Neither one of us … And I don’t believe anybody should be in the business of selling somebody something and hoping that they fail because that’s a horrible business model. When I sell a house, I want the grandkids to inherit it. You know? But, life happens you know. I don’t cause those foreclosures, they cause those foreclosures, the people that are in them, or they have something happen to them that is just overcomable if that’s a word. Overcomable Larry, is that a word?

Larry Goins: Close enough.

Mitch Stephen: You’re from the South, you’re probably like “Everything’s a word” like me. You know, there’s foreclosures all over the country and it’s just because things happen.

Larry Goins: Life happens.

Mitch Stephen: Yeah, life happens. Someone’s going to get that home and it might as well be you or Larry. I mean, you or Larry or me or somebody. But if you have to take a home back, you know. I always say talk to the people, see if there’s a resolution. If it’s just something as simple as, “I lost my job three months ago, but I got a new job and it’s a better job, I just can’t catch up.” You know we just take the three payments, we put it on the back end that way it will keep going. It’s cheaper than reselling the house, but try to find some kind of Christian way to deal with it. And at the end of the day, if the guy just can’t stay and there’s no way out. No way to …

Larry Goins: Exactly. No, I was just going to say. In fact, I did a little break down of it. When you owner finance the house, the absolute best thing that can happen, from best to worst. The best thing that can happen is they’re able to refinance and pay you off in a short period of time. That way you get the full balance without having to take a discount. Okay? And the next best thing that could happen is they stop paying and you get to sell it again. That’s the next best thing that could happen. The third best thing that could happen is they pay you as agreed. Okay? That they do what they said they were going to do. They make their monthly payments. And the worst thing that could happen, is you have to modify the loan. You modify the loan and lower the payments for them to help them out. You don’t have to, but you can. And I’ve done that.

I’ve got a house I just sold last month. First time I sold it, I sold it for 79-9. I got 10 down. The second time I sold it for 89-9 and I got five down. Third time I sold it, I sold it for 89-9 and I got three down. I just sold it for 99-9 and got another 10 down. And that’s over a five year period of time. I had 55 in the house. I collected 63 including down payment and payments over the last five years. So I’m over 8,000 dollars ahead and now it’s bringing in 808 a month. And I got nothing in it. Nothing in it.

Mitch Stephen: Wow.

Larry Goins: That’s a heck of a deal.

Mitch Stephen: Yeah, that happens sometimes. I call them little black cloud houses. There’s no rhyme or reason why you have to keep taking them back and selling them, but eventually you find the one that sticks.

Larry Goins: Exactly.

Mitch Stephen: I’m not sure though that you answered the question I asked you. How many offers are you cranking out when you’re rolling per month?

Larry Goins: You’re right, I didn’t answer that. I’m sorry, I have ADOS- Attention Deficit OOH Shiny.

Mitch Stephen: I like that. Attention Deficit OOH Shiny.

Larry Goins: I tell my wife she has CDO. That’s like OCD except they’re in alphabetical order the way they should be.

Mitch Stephen: Yeah, so.

Larry Goins: Here’s what we’re doing. When we make an offer on every house in North and South Carolina available to an investor, every day. It can be somewhere between 150-200 offers a day. Bear in mind, I’ve got a VA in the Philippines. His name is John Paul and all John Paul does; he manages our HUD spreadsheet. When you go to HUDhomestore.com, what you can do is, you can do a search, you can export that list, and then we have a Google Docs spreadsheet that we have created that has certain fields in it. And we merge that list every day with our Google Docs spreadsheet. John Paul does that, okay? Any VA can do it, or anybody who knows anything about spreadsheets can do it, no big deal. And then we use that spreadsheet to put in our bid amounts and our offer.

And I have two different ways I do this. I have the shotgun approach and the rifle approach. For example, let’s say I was moving into the Texas market, okay. And it’s going to be years before I get there and we’ve got a 10 year plan to be in 10 states consistently in 10 years. But, right now, let’s say I moved into Texas. What I would do in this, I would start out with the shotgun approach and then move my bidding to the rifle approach. Let’s say I wanted to make an offer on everything in Texas, every day. I’m going to start out with a percentage of list. Let’s say that a house is listed for 50,000. Everything 50,000 or less, I’m going to offer 25 percent as an example. Now, you have to change it based on your market. Texas is a hot market. I might have to change that. But here, I would start out, anything listed 50,000 or less, I would start out at 25 percent. Anything listed for 50 to 100,000, my bid would be 35 percent. And anything listed over 100,000, my bid would be 50 percent.

So, I would start out with the shotgun approach and now I’ve got some offers going okay? You see my offers coming in everyday and I’m going to get a few counters every day. Now, I take the counters and I drill down to the rifle approach. Okay? Not only the counters, but after I’ve got all my bids going, I’m going to start analyzing every single individual property. You spend about five to 10 minutes. You’re going to pull comp, you’re going to drive the street on Google Map. You’re going to pull rent comp.

You’re going to also look at the PCR. Another great thing about HUD houses, they give you what’s called a PCR. That stands for property condition report. And it’s not going to tell you if the house needs paint or carpet or countertops, but it gives you the major items. It’s going to give you the items like, for example, it’s going to give you the HVAC, the electrical, the appliances, the plumbing, the water heater and septic system and the roof. You know, Mitch, those are all the big items right there. Everything else is cosmetic. So, it lets me know if they’re functional, they’re operational. Now, is that 100 percent accurate? No, but does it give me a good idea what expenses it’s going to take to get this house in a livable condition? Absolutely.

So, we look at the PCR, we do all that, then we put a specific number on it. Let’s say a house is listed for 40 grand. If I’m offering 25 percent, that’s 10,000 dollars. I might go from the shotgun to the rifle, analyzing this deal and determine “Hey, I could really pay 18,000.” So now, on my special HUD spreadsheet, I’m going to change it from 10 to 18. And now Marcy, my other VA, everyday when she comes in, she’s going to bidding 18,000 on that property. And that’s all she does for about three hours a day. She could put in a couple, 300 bids in about three hours a day.

And that’s all she does is log into HUDhomestore.com, look at the spreadsheet, take that number and put it in a bid, hit submit. We fill the form and hit submit again with the next one. And she’s got it down to a little system. She’s got a little form filler, Mitch. A little form filler like you have for like RoboForm or something like that. And it fills everything in except for the case number and the bid amount. She fills the form, enters the case number and the bid amount, clicks submit, hits the back button, refills the form with like our buyer information and all that stuff and realtor information. And then changes the case number and the bid amount, hits submit and she can do a day’s work in about three hours. And that’s kind of how we bid on those things.

Mitch Stephen: Okay, so listen up folks. Larry bids on every house in South Carolina every day when he’s cranking.

Larry Goins: And North Carolina.

Mitch Stephen: And North Carolina. Every house, every day. You notice, it’s always the same theme, the winners in this business are taking massive action, massive action. They’re figuring out how to streamline it and then they’re hiring someone to handle the day-to-day ins and outs of it. And a VA overseas or anywhere, is a perfect way to do it because you don’t need to meet these people. They don’t need to be your employee. You just need to sub it out for a few hours everyday and get done what you need to get done.

I can absolutely see how that would work on that level. You know, doing that a massive amount of action. I can see it. As a matter of fact, you’re giving me incentive, or you’re inspiring me is the word, to go ahead and hire someone to do exactly this in my state. And just make it another avenue.

You see, Larry and I are probably really good at finding out what works and delegating it out to someone to do, like 80 to 90 percent of it. And then, we find a different avenue, and we find someone else to handle that avenue. And then we find another avenue and we find someone else to handle that avenue. And all of a sudden we have four, five and six avenues running. And you wonder how you buy 100 to 150-200 houses a year. You hear about people doing that.

That’s what they’re doing. They’re not running all this stuff themselves. They’re working it like a CEO from the top down and they’re finding money-making avenues, or I call them lanes. Like at my place, somebody’s working probates. Somebody’s working behind in taxes. Somebody’s working, you know the realtors. Somebody’s working … And I have all these avenues and I keep them separating so that people don’t step on each other’s toes. For example, if you’re going to go on a website and bid on houses, like the HUD website, why in the world would I want two of my people doing that? I’d be bidding against myself. So make sure those people don’t step on each other and cost you money.

What else is there to know about HUD homes? Can you only get so many or can you buy as many HUD homes as you want?

Larry Goins: No man, there’s a lot of cool things about HUD homes. See, in fact, most of them, but not all of them, there’s exceptions to every rule, everybody’s got to understand this. But most of them are already listed below market and they have that PCR, property condition report. And another cool thing about them is they’ve been cleaned out. You never go into a HUD house that’s been trashed. I’ve bought a lot of foreclosures. Furniture’s still there, it’s trashed or whatever. You know, you’ll never find a HUD house that hasn’t been cleaned out. If the house is smelling, if there were animals in there, they’ve even taken the carpet out, okay as well. If it had a pool or has pool, they put something over top of it to prevent anybody from falling in it or anything.

You can buy them at a discount and there’s no deed restrictions. You know, some banks have deed restrictions where you can’t make more than say, 10 percent in the first 90 days. HUD doesn’t have that. You can buy a HUD house this morning for 50,000 and sell it this afternoon for 150,000. Okay, there’s no deed restrictions or seasoning, as a lot of people call it.

And, there’s also a lot of data available for these things. And the best part is, we can buy them dirt cheap. I mean this house I got recently, 35 percent of list price and it had been on the market … Now 35 percent is not that unusual, but because it had only been on the market for 16 days, that’s unheard of. Usually, the sweet spot Mitch, is about, if it’s been on the market for probably somewhere between 50 to 75 days is about the sweet spot. But this one, it was on the market for 16 days and we picked it up for 26-6. It was listed for 76,000. Brick ranch, three bedroom, two bath house. And it’s livable.

Mitch Stephen: So, would you suggest just hitting the sweet spot area, you know, if Texas has, you know, a ton of foreclosed houses, you could narrow it down by just hitting the sweet spot. Pick all the ones within the price ranges like you said, certain discounts for certain price ranges, and then just hit the ones that are like over 50 days old?

Larry Goins: Yeah, well you can do that. You can absolutely do that, it’s not a big deal. But, to me, it’s just simpler just to bid on everything because you don’t really know what you’re going to get. If I did that, I wouldn’t have got this deal that had been on the market for 16 days.

Mitch Stephen: Yeah, that’s right.

Larry Goins: You never know, you just never know.

Mitch Stephen: And that was a good thing that you pointed out. They don’t limit you on how many days you have to hold it before you sell it again.

Larry Goins: Right, right. The only limitation is, and this is not exclusive to HUD houses, but if you’re retailing the property and your buyer is getting an FHA loan, then you must hold the house for 90 days, but that’s regardless of where you got the house. That has nothing to to do with HUD.

Mitch Stephen: To me, that’s not really a big problem.

Larry Goins: Because we’re not retailing houses.

Mitch Stephen: Yeah, we’re not retailing houses.

Larry Goins: Just bank financing. Yeah, but listen, whatever you bid … See HUD is a daily auction Mitch. It’s a daily auction. Every day, every day you bid on the house and when you bid, one of three things may happen. Nothing could happen. In other words, if the person who’s bidding, your agent, the buyer’s agent; if they started a bid at HUDhomestore.com, if they don’t hear from HUD’s asset manager the next day, it simply means the bid expired and nobody’s further obligated for anything, okay. However, I do want to share this with you. Whenever you put in your bids, you need to tell your agent to make sure they check that little box that says “Leave this bid open” as a backup. What that means is, if HUD takes somebody else’s bid, and then that person backs out, they may take a backup before they put it back out on the market. Now, that’s not going to get you many deals, but if you’re making as many bids as I do, it will get you about another deal and a quarter. That’s about it, but it will get you one every once in awhile.

So, the second thing that can happen is you get a counter offer. That’s what we like to see. We like to see a counter offer, okay. Now, typically, and I’ve had people complain about this, “Larry, it was listed for 40, I offered 10 and they countered at 38.” You know, that’s normal okay. You know that Mitch from buying through realtors and other MLS sources. Basically, if they get a counter and what you want to do is, if you get a counter, there’s four things you can do, okay.

There’s four different things you can do when you get a counter. Number one, you can accept the counter. Number two, you can counter back, okay. Number three, you could do nothing and the counter simply expires. And number four, you can submit a whole new bid, okay. A whole new bid all together. So you could do nothing, you could counter back, you could submit a new bid or you could accept their counter. Okay, that’s the four different things that you could do. Does that make sense?

Mitch Stephen: And I like how you said, you know “If you don’t put the backup, you won’t get that many deals, maybe just one a quarter.” I’m sitting here doing the math. I mean, if those four deals that you get that year because you put in backups, it’s just 10,000 dollars profit each that’s 40,000 bucks. So, I love how you slow played that. What if they were 20,000 a piece? That’s 80,000 dollars for the four of them, you know? So that’s a small percentage, yeah.

Larry Goins: Yeah, that’s a good point.

Mitch Stephen: Yeah, that’s a good point.

Larry Goins: Yeah, that’s a good point. And now the third thing that could happen. The first is nothing, it expires. The second is you get a counter and then there’s four things you can do. And the last thing that can happen is they accept your bid, okay. They accept your bid. All right? And they accept your bid, then here’s what happens. All right? Once they accept your bid, you have 48 hours, two business days, keyword being business. Business days to get your paperwork in because when they send you an acceptance, then they’re going to send the realtor the contract package with all the addendums and all that.

With HUD, you can’t put in “Subject to financing” “Subject to partner’s approval” “Subject to an inspection” There’s none of that, okay. It’s as an investor now. As an investor. If you send in your contract with your deposit, all right? If you send in the contract with your deposit and you don’t close for any reason, you’ll never see that deposit again. And the deposit is pretty simple. Any bid that’s accepted at 50,000 or less, the deposit is 500 dollars. If the bid accepted is over 50,000, the deposit is 1,000. That’s true all over the United States. Okay, it’s either 500 or 1,000 okay. It’s either 500 or 1,000.

I’ve seen some realtors and I’ve had some of my students who said “Larry, my realtor wants 10 percent for a deposit.” Well, you know Mitch, that’s the realtor telling them they want 10 percent, not what HUD requires. The realtor’s just trying to get them more in the glue. Does that make sense?

Mitch Stephen: Yeah, sorry, I had it on mute there and I’m sitting here talking to myself. I got a squeaky chair here and I was moving around and I didn’t want you to have to suffer through it.

When you put an RS money deposit, there’s no rule about how much there is. People will say, “Well the rule is you put down 10 percent.” There is no rule. There’s no rule on anything.

Larry Goins: No, all we know is HUD requires, if the price is 50,000 or less, it’s a 500 dollar deposit. If the accepted bid is over 50,000, it’s 1,000 dollar deposit. Anything more than that, that the realtor tells you is the realtor trying to get more money out of you.

Mitch Stephen: Yeah and that’s reasonable, don’t you think? 500 to 1,000. Now, some people might say “Well, what if you don’t have the 500 or 1,000?” Well, you know, certainly, lets make this your first lesson in your baby, tiny step into the world of private money lenders. Go find someone to loan you the 500 and 1,000 so that you can form a relationship. Pay them what you agree to pay them. It doesn’t have to be a whole lot, but pay them something. You know, 250 to 300 dollars on 500 bucks, that’s still worth it and it’s a great return for this guy.

When you’re doing a HUD home … Every HUD home in two states, you’re just making a copy of a check, right, and submitting it with every single contract until it’s accepted?

Larry Goins: Well, now, you don’t even have to do that. You don’t have to send them a check. All I need to do is once a month, update my POF, proof of funds. I give them bank statement once a month and that’s it. That’s it. We don’t have to send them the money because, see they don’t even allow a personal check or a company check anyway. It’s got to be a certified check or money order or wire the money. They don’t allow personal checks or company checks. We don’t send them the deposit.

Now, think about this. You remember I said you have two business days to get the contract and the deposit in. So, if you put in a bid on Monday, if they accept it on Tuesday, you have until Wednesday, Thursday to be able to get the paperwork in. So, which means you’ve got to overnight the next day. You put in the bid on Monday, they accept it on Tuesday. On Wednesday, you’ve got to overnight it so they get it on Thursday. So, if you’re brand new, if you’re just starting out, and you’re nervous about having enough time to do your due diligence before you send in your 500 dollars, only make your bids on Thursday. This way, you put it in on Thursday. If they accept it on Friday, now you have Saturday, Sunday, Monday, Tuesday to get it in. It gives you two extra days. Does that make sense?

Mitch Stephen: That’s brilliant. I mean that’s the kind of things we need to hear because not everybody is as comfortable with the process in the beginning as you are right now after doing it for years.

So, this proof of funds letter. There’s places to go get proof of funds letters right? Or easy enough?

Larry Goins: Yeah, absolutely. I put together a directory of all the different transaction and funding lenders that give them away freely without you even having to qualify. They don’t pull your credit or anything like that, but all you gotta do is do an online search for transactional funding, day funding, that sort of thing. And you can find them out there that do transaction funding and they’ll give you a proof of funds letter.

Mitch Stephen: Okay, because that’s an obstacle for some people. And here’s the thing. When you run into obstacles, people, don’t stop. Find out someone who’s been doing whatever strategy you’re trying to do, for years. Go ask them how to handle the obstacle. There’s an answer for everything or a work around, or some legal way to get what you need to get done and not be stuck in this hole that you think you’re in all the time.

Larry Goins: Absolutely.

Mitch Stephen: So, I guess what I’m saying is though … So you just attach this proof of funds letter to every offer that you make. It’s just like part of the offer and that satisfies the HUD …

Larry Goins: Well, really, you don’t even have to do that. That’s really for your agent because when you submit a bid at HUDhomestore.com, you don’t have to upload a proof of funds letter or check or anything like that. You’re just really submitting the bid. And because it’s the agent that’s submitting the bid, or an assistant you hired for the agent, HUD’s asset manager assumes that the agent has pre-qualified that buyer before submitting that bid for them.

Mitch Stephen: Oh, so you’re saying it’s helpful to have a proof of funds letter when you’re trying to find the realtor that’s going to make these offers with their n-a-i-d number?

Larry Goins: Exactly. Exactly.

Mitch Stephen: I get it. So, and they can learn all this stuff from you in your free book that you’re offering “HUD Homes Half Off.” Do you learn all this stuff in the book?

Larry Goins: Yeah, absolutely. The book is available wherever books are sold and then it also includes the spreadsheet that I’ve talked about, as well as some other tools that you need. They could either go out to the bookstore and buy it or buy it on Amazon, but we’re going to give away a free copy right here on your show.

Mitch Stephen: You just go to 1000houses.com/hud,  h-u-d. And, let me ask you this, Larry. Does that list of transactional funders that can provide you with a proof of funds letter, are they in the book too?

Larry Goins: Once they get the book, they’ll be on our list and they can ask us. They can submit a ticket to customer service and we’ll give them the link. I’ll tell you what we’ll do. If you want to, you can put a link on there as well, and we’ll put a link over to for them to get that as well. How about that?

Mitch Stephen: Okay, so when you got 1000houses.com/hud, h-u-d, you’re going to be sent over to Larry Goins’ show notes for this episode of the Real Estate Investor Summit Podcast. And in the show notes, there’s going to be a link to get your free book. And there’s also going to be a link to get this list of transactional funders or day funders that can easily provide you with a proof of funds letter to present to any realtor when you approach them and ask them if they would help you get a hold of that HUD list every day.

And then, the next step is to talk that realtor or broker into letting you hire an assistant for them so that they don’t have to do any work and they just get paychecks.

Larry Goins: Yeah, absolutely.

Mitch Stephen: This is a great eye-opener. And don’t be surprised if little old Mitch Stephen down here in San Antonio, Texas starts making a lot of HUD offers because all this is, is a little system that you set up, that’s going to run every day. And under Larry Goins’ advice, or inspiration, I believe that I’m going to pick up maybe an extra 20-30 houses this year form that. So, I’m going to give it a run for your money, Larry.

Larry Goins: There you go. That’s awesome, man. That’s awesome.

Mitch Stephen: Open up another lane. You know, when you get about a seven lane highway going to your bank account, money starts showing up.

Larry Goins: Exactly.

Mitch Stephen: All right, well anything else we need to know about HUD homes before we go?

Larry Goins: Well, listen, in my opinion, HUD is the fastest, quickest, simplest, easiest way you can make offers and buy properties. I don’t care where you live or where you want to buy. I even talk in the book about, you know, all the different places you can buy houses. And you don’t even have to be there. I mean, listen, Mitch, you know I was virtual investing before they came up with the term, virtual investing you know.

Mitch Stephen: What did you call it?

Larry Goins: I’ve been doing this … I just called it “buying and selling a house without having to look at it.” It’s kind of crazy.

Mitch Stephen: One more question. How many houses can you buy a year when you have this system fully operational and you’re blowing and going? How many houses does this system produce for Larry Goins in the two states that you operate in?

Larry Goins: Well, that’s a really good question and basically, HUD is not all that I do. I also work a lot of MLS. I have done direct mail, but I’m not a big fan of direct mail. Number one, it’s so expensive. It’s so expensive. And we usually say in the, you know, 70, 80, 90 range, but a couple years ago, we did 101 or 103 or something like that, as far as the number of houses that we buy. But the good news about HUD is … Think about this.

There’s two ways to expand your business. You could go deep or you could go wide. In other words, if HUD was only getting me one or two deals a month, if I wanted to do more deals, I could add direct mail, I could add MLS, I could add bandit signs, I could add bird dogs, I could add other wholesalers. You know, I could add whatever. You know, Craigslist adds, whatever it is. That’s going deep okay.

Or, I could go wide. If HUD was only getting me a few deals a month in each state, I could expand into Georgia, Alabama, Kentucky, Tennessee and move that way. And that’s going wide. And I wouldn’t have to change my model, I wouldn’t have to change how I do houses, all I’d have to do is bring in more virtual assistants, for virtually nothing, to do the work for me.

Mitch Stephen: Yeah, and great advice. You’ve been a real inspiration today Larry. I want to thank you for taking the time to be on the Real Estate Investor Summit Podcast and everyone out there, I’m so glad you had the chance to get you some Larry Goins today. Man, it’s a pleasure. I hope to bump into you again because we don’t meet often, but when I do, we always seem to have fun. You’re a great Southern gentleman with a terrific mind and a huge work ethic and a great big old heart. So, I’m just really glad that we took the time to connect here today and I hope to see you soon, Larry.

Larry Goins: Man, that sounds great. I feel the same way and I really appreciate your kind words. And I mean, you’ve got a tremendous amount of education and information as well, and I’m always listening to your podcast. And even when other people are interviewing you. I listened to you on Flip Bird the other day and another one, you and a few others and stuff, so. Yeah man, I’m always listening to what you guys are doing.

Mitch Stephen: We’re having fun out here, educating people, but the main thing is, we’re out here educating people; but we’re still buying houses, a lot of houses per year. So, we’re still in the game. We’re not just talking about it, baby, we’re out there doing it. So, until the next time, Larry, I’ll talk to you at a later date and I look forward to seeing you again.

Larry Goins: That sounds great. Thanks a lot.

Mitch Stephen: Alright, this is Mitch Stephen with the Real Estate Investor Summit Podcast. We’re out of here.

You’ve been listening to the owner financing master, Mitch, Be the Bank, Stephen on the Real Estate Investor Summit Podcast. Let us now blatantly, without apology, drive you toward financial freedom by offering you a whole bunch of free stuff. Go to 1000Houses.com and “getcha some!” And ya’ll come back now, ya hear?


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