Review The Hud Before You Close When Flipping Houses For Profit

When flipping houses for profit always review the HUD before you go to closing. I bought some bank repo houses recently with my IRA and the HUD was nuts up on one of them. I had to fix it. That is why we always get it ahead of time and read it. If it needs to be fixed we’re ok.

There will be times when you work with an agent from a different part of the state. They have different rules. In my county, the seller always pays for a certain item on the HUD. In other counties we pay for it along with something else. If you’re dealing with an agent from a different part of the state, you’ll run into different things. The HUD dictates where the money goes. If this is wrong then you’re in trouble. That is why you have to check it ahead of time and think about what’s going on. My system is this; we’re getting ready to go to closing, I look at the HUD. My Trustee, Kevin looks at the HUD. Then when Kevin goes to the closing he looks at it again.

Obviously, you will need to keep track of the HUD statement for future reference. You will sell a property and get excited about it. You stick your paperwork somewhere. You might then get a call from your accountant who wants a copy of the HUD. You have to look through your files to find it and it can be difficult. So have a system to make sure you can easily find the HUD. What I do is on the day of the sale; I run a copy of the HUD and stick it in a manila envelope then stick it on the desk. When the accountant is calling for it, it is easily accessible.

You need a purchase and sale agreement and in some cases you might need a monitory consideration. This monitory consideration is one of the few things you should not use a private lender for. At the time, you don't own the property therefore you can't secure your private lender's money. We just use a standard purchase and sale agreement. We sit down with the seller and draw up paperwork that deeds us the property. That paperwork gives us immediate power of attorney. This is only when we are being deeded the house 'subject to'. This is before we actually purchase anything. We have to record the paperwork but we eventually develop a formal document. This is important because our attorney needs to handle the disbursement of funds. This is a cash closing. The property is legally deeded to us from the moment of the signature.

I used to have the sellers deed me the house right at the kitchen table. Ownership of that house transferred at that moment. Some people don’t think it happens until you walk downtown and record it. In reality, it happened right at that kitchen table. I own the house at that moment. And then you can go and catch up later on downtown. I don’t go to closings to buy anymore. I don’t go to closings to sell. The way my system is set up, I have land trust and I have a trustee. I use Kevin as my trustee. So Kevin goes to goes to closing to sell. Kevin is my trustee, which means legally he can only do what I tell him to do. He goes off to a sale and scrutinizes that HUD. In fact, he’s caught and solved a few problems for me on that third look over.