"Good Neighbor Next Door" HUD program

[skyler]

Heard of anyone purchasing a home through this program?


from HUD's website:

"About Good Neighbor Next Door
Law enforcement officers, pre-Kindergarten through 12th grade teachers and firefighters/emergency medical technicians can contribute to community revitalization while becoming homeowners through HUD's Good Neighbor Next Door Sales Program. HUD offers a substantial incentive in the form of a discount of 50% from the list price of the home. In return you must commit to live in the property for 36 months as your sole residence.

How the Program Works:

Eligible Single Family homes located in revitalization areas are listed exclusively for sales through the Good Neighbor Next Door Sales program. Properties are available for purchase through the program for seven days."

[TrulyStashin]

I've been watching for HUD homes in my metro area that fall within the program (my BF is eligible).  So far this year, there has been only one.

Phbtttttttt.  Note to HUD:  If you don't put many/ any houses in the program, it won't be very effective.

[skyler]

We have been watching also, but only saw two so far. The school districts were absolutely the worst in both cases... Would work well for those who don't have school age kids...

[Another Reader]

HUD revitalization area = war zone.

[_JT]

Oversimplification

[more4less]

Would work well for those who don't have school age kids...

It has 3 year residency requirement. So after these 3 years of interesting experience you can flip it at 50% profit (given prices didn't change). Correct?

[Another Reader]

Let's put it this way, I have never seen a HUD Good Neighbor property in any neighborhood with which I am familiar that I would invest in or live in.  .

The requirements for a Revitalization Zone are found by clicking on Housing Notice 11-02 on this page: http://portal.hud.gov/hudportal/HUD?src=/program_offices/housing/sfh/reo/abtrevt.  Basically they are very low income areas with low home ownership rates and/or very high foreclosure rates.  HUD discounts the property value of some homes in Revitalization Zones for qualifying owner-occupants by 50 percent.  In return, buyers sign a sleeping second note on the property.  As long as the buyer lives in the property for three years, the note is forgiven.  Might be some instant equity, if the neighborhood values did not decline by 50 percent in the three years.

I'm all in favor of slowly building a rental portfolio by serial purchases of owner-occupied homes that are turned into rentals when the next house is purchased.  This approach works really well for folks that stay in one area and buy bread and butter single family homes in decent areas that need some minor repairs and cosmetic upgrades.  Decent areas do not include HUD Revitalization Zones.

It will be interesting to hear from _JT AFTER he has made a few purchases and managed them for a couple of years.  Some people do well at this type of investing, most do not.

[arebelspy]

It will be interesting to hear from _JT AFTER he has made a few purchases and managed them for a couple of years.  Some people do well at this type of investing, most do not.

+1

Typically the kind I see that start with his type of posts end up a few years later complaining about tenants, how you can't make money in real estate, landlording is terrible, etc. etc.

I hope that isn't the case here though.

[_JT]

It will be interesting to hear from _JT AFTER he has made a few purchases and managed them for a couple of years.  Some people do well at this type of investing, most do not.

+1

Typically the kind I see that start with his type of posts end up a few years later complaining about tenants, how you can't make money in real estate, landlording is terrible, etc. etc.

I hope that isn't the case here though.

It will indeed be interesting! I have a lot to learn, but if you think I'm not considering the risks associated with investing in C neighborhoods, you're wrong.

arebelspy: Aren't your rentals in more or less C areas in Vegas and Detroit?

[skyler]

Might be some instant equity, if the neighborhood values did not decline by 50 percent in the three years.

yep

[skyler]

Would work well for those who don't have school age kids...

It has 3 year residency requirement. So after these 3 years of interesting experience you can flip it at 50% profit (given prices didn't change). Correct?

From what we read in the HUD guidelines, any equity in the house is yours to keep after the 3 year requirement is satisfied. The "silent" second mortgage for 50% dissolves and you can sell the property or continue living in it.

[arebelspy]

arebelspy: Aren't your rentals in more or less C areas in Vegas and Detroit?

I don't know what you classify as a "C" area.  Those categorizings always have seemed nebulous to me.  Blue collar tenants in MI,  mostly blue collar or white collar in Vegas.  Occasional section 8.

If you were asking if I only have properties in those two areas, yes, at the moment those are my only rentals - I also have notes on properties in a half dozen other states, but those are a different type of investment.

I guess that'd be C+/B-?  I donno, like I said, the letter rankings never made much sense to me.

I have the impression you are looking at lower class properties than that (based on a previous comment about them being "between blue collar and ghetto") but maybe I'm wrong about that.