In this episode, I, Donny Coram, discuss the surge in FHA foreclosures and share tactics for investing in these properties. I emphasize the importance of using HUDHomestore.gov and understanding the two main types of HUD property status.
To assist listeners in their search for FHA foreclosures, I recommend using HUDHomestore.com, despite the fact that the app has not been updated and is not compatible with current IOS. I encourage listeners to see this as an opportunity, as fewer people are looking into these properties due to their poorly marketed and underpriced nature.
Don't miss this episode if you're interested in investing in FHA foreclosures and want to learn how to take advantage of these underpriced properties. Join me, Donny Coram, and let's explore this exciting opportunity together.
Article: FHA Foreclosures Surge
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Welcome to the Foreclosure Deals Coach Podcast. The real estate market is shifting. The time is now. The Foreclosure Deals Coach Podcast is your home for the mindset, tactics and tools needed to break through your limiting beliefs and find freedom by investing in foreclosure deals. Don't buy a house, buy a deal. You need to get into this right now. And now your host, the Foreclosure Deals coach, Donnie Korum. Hello, hello, hello and welcome back to the Foreclosure Deals Coach Podcast. I am your host and foreclosure your deals coach, Donnie Coram. My mission every week is to educate you about building income and wealth with foreclosure investing. So please don't forget to follow, like subscribe to this channel here wherever you consume your content. On today's show, we're going to be discussing the recent surge. F H a foreclosures, we call them HUD homes, and it's going to be an incredible opportunity for investors to pick up foreclosure deals directly from the federal government. But before we get into that, gotta get your mind right. Let's talk about some mindset stuff. Today we have Henry Day with Thorell, the famous author talking about many men go fishing all of their lives without knowing. It is not phish that they are after. Now that's an interesting quote. Is it not? Are you fishing like the way I see that, and there's a couple ways to interpret that. Okay? But the way I see it from a coaching angle, okay, people are out there now fishing for information. The reason you're watching this very podcast show right now is because you're trying to get information about real estate investing. Here's the problem with that, okay? There's a ton of information out there. Not all of it's good information. Right, and none of it generally, it will impart you to take. Action. Okay, so you're out there fishing like a madman. You're casting your line, you're getting information, you're downloading the book, you're joining the Facebook group, you're joining other Facebook groups. You're talking to your uncle Ted, the transmission mechanic about real estate investing. All in this incessant quest to learn more about this real estate investing game that you so desperately want to become a part of. Right. And, and I don't say this to be negative. I remember when I was exactly in your shoes just about 20 years ago. Okay. And what shifted my entire attention span was seeing, first of all this big surgeon. Foreclosures in my local market. See, I was instantly attracted to HUD foreclosures, and here was why. Okay. As an agent back then, and I didn't start out as an agent, okay. But as an agent, they were paying a lot more to agents to sell HUD foreclosures at the time, whereas the normal commission rate was 3%. Back in this time period, the government was so motivated to offload the excess inventory of HUD foreclosures. Filling up their books that they started offering. 5% commission to get those deals done. Okay? So as an agent, I'm like, well, geez, if the money's there and these are opportunities for people, why would I not go fishing in that area? Okay? You're on the quest for knowledge, but what you really need to be on the quest for is action. If you catch a fish, you're gonna eat for the day. Okay. If you learn the consistency of fishing, if you understand where the best fishing holes are, right? How to get the right boat, you've managed to fund this giant yacht so you can go fishing out in the real deep ocean and get, get really good fish. You're gonna be in a much better spot than the guy who's just out there casting his line on the bridge, cuz I don't think it's fish. You're looking. And I don't think deal hunters that it's just deals you're looking for. They're out there. This resurgence proves it. There's a ton of deals available in the market right now, and depending on you, where you are, that's getting more and more to be the case. The problem is what are you gonna do with those deals if you happen to catch one? Okay, so I just wanna bring up that we're gonna, that's kind of my leadway into our article for today. Let's hop open that article here so you can take a look at this because it, what it's telling us is that there's going to be a shift in the market here because there are just so much available in that foreclosure marketplace. Lemme just bring that up. Yeah, let's hot beer and. Here we go. All right, so this article came from New America and basically the, the title of it is as Foreclosure surge. So pre pandemic levels. What does that mean? Well, after a two year low, The US foreclosure rate is surging. According to the real estate data firm, Adam, where I get a lot of my foreclosure data that I provide to my coaching students, foreclosure filings have increased by 167%. Now, a lot of what they're citing is, the reasoning for that is there was an end to the pandemic protections for homeowners that couldn't. Pay their mortgages during the Covid crisis, right? So now I can tell you firsthand, this is a great story. You'll appreciate this. Cause I talked to somebody else and they went through the exact same thing, and maybe this is your story as well, but in the pandemic there was people were like going to their lender and saying, I can't pay the mortgage. And actually when things got really bad, the mortgage company started offer. You remember this? They were offering homeowners the ability to defer their mortgage payments during the pandemic, right? As a, Hey, we're here to help. We know people are going through some stuff right now, right? We can defer your mortgage payment for a while, no big deal. We'll just tack the deferred payment onto the back of the mortgage. Now, at the time, I didn't know where the market was going. You guys didn't know where the market was going. I didn't need to defer my payments, but I had a rental property. I'm like, yeah, you know, it's not rented right now. I didn't have a tenant in it. I didn't know how long it was gonna take to get a tenant in it, so I'm like, yeah, all right. We'll go into further mortgage payment for a few months. Okay. The pandemic ends, you know, we're talking, you know, ends quote unquote, right. We're still kind of dealing with it now. Right. But as things were kind of getting back to normal, and for me, I didn't even wait until it was at full normal. I was like, all right, I'm ready to start making payments again. Things were turning around. You know, you think about the transition from 20 to 21, the real estate market started to surge. I got that property rented, all the stuff that needed to happen. So I'm like, Hey, I'm ready to start making payments again. They went, okay, we just need$8,000 secure The. I'm like, no, no. Our agreement was that you were going to defer the payments and then you're going to tack the payments on the back of the loan. They said, we said no such thing. I'm like, listen, man, I didn't even really need the money back then, but I am most certain I would not have racked up this extensive mortgage. If I had known you guys would want this payment up upfront, I am a hundred percent certain that you said that you were going to tack the deferred payments onto the back of the mortgage. I would not have done this deal otherwise, to which I responded, we would've never said anything like that. Sir, I don't know what you're talking about. And we needed to cure this mortgage. It's gonna be$8,000, otherwise we're gonna drive it into foreclosure. Well, I am blessed to be in a position where I could handle that deferred payment and I wrote a check for it and I was okay. I was. But I was okay financially. You gotta think about all the people in the US who are now dealing with the fact that they deferred those mortgages for a while. The lender's like, okay, deferment period is over and you owe us 20,000,$30,000, or whatever, right? That simply did not save that money, didn't have that money, could never put that kind of money together. Okay? And those people are in a jam. So this article is speaking to the fact that a lot of people, No longer have the protections that they had. The question that the articles going on to ask is, did the pandemic protections work at all? And the answer is no. They would've only been functional if the lenders had done what they said they were gonna do by tacking those mortgages on the back. How does this benefit us as foreclosure investors? Unfortunately, this is bad news for a lot of people who are now going to be heading into foreclosure. I can tell you not. Not a small percentage of them have started working out this problem. Okay, they may be taking payments now, but they've got those back payments there and the lenders saying, Hey, we gotta figure something out. Maybe they've increased their payment to cover the gap, but I can tell you a very small percentage of people are even working through this. So the article then asks is a foreclosure crisis coming? Well, I'm gonna say yes. Okay, but crisis has a negative connotation. I kinda see it as a benefit, right? I believe that this crisis they're referring to is going to be opportunity for savvy investors who understand what's happening, can see how these lenders basically screw people over by lying to them that they were gonna defer the payments to the back of the load. And now, Wait for it. The banks are gonna get greedy and go, well, he's laid on 10,000 worth of payment. He owes 200 grand on the property and the property's worth 400 grand. I think we're gonna foreclose on that one. Right, and that's what happened in the last crisis. The bra banks got super greedy and they saw all the equity on the table. Even in the declining market that we're in, there is more equity in the real estate market than ever in the history of the United States of America. Give that some thought. Okay. And these banks lent that money out at. 3%, 4% interest rates. Do you really think they're gonna hesitate for a moment to get double the equity on that$200,000 note that's now worth 400,000? It might have been worth 450,000 when the market peaked out, right? They may have been super amounts of equity. It's, it's trickled down a little bit. I'm not arguing that. Fact, but there's still so much equity in the properties that are available that are now behind because they deferred those payments. I'm telling you, the opportunities for foreclosures are going to be everywhere, and I'm seeing it in real time. One of my favorite places to locate foreclosure deals is the HUD home store site. And just to give you an I just to show that to you real quick here, I'm gonna pop. And show you the HUD home store site. This is where the HUD foreclosures live. Now, they're also listed on the market, but just like privy, this is the ability to filter and just see the HUD foreclosures right there in your local marketplace. So you hop into hud home store.com, you show you my screen here. right. So you can see, and I'm just gonna make myself a little bit smaller so you can see this little, there you go. All right, so you hop at a hud home store.com here, and then you put in your state and or county. I'm in Colorado in El Paso County, and I like to look at this list all the time because though not all foreclosures or deals, and not all deals are foreclosures, they tend to be good deals here, and there's nothing in El Paso County individually. But if you look at the state of Colorado as a whole, here we go. I can tell you I was looking at the state of Colorado not a year ago, and there are one, maybe two at any given moment. We're now at 12, and each and every single week I see this number increasing. Okay, so this is a realtime look at the F H A foreclosure market. A quick reminder for those who don't know, a HUD foreclosure is an F H A loan that did not produce. So when you get a usually first time home buyer loan and you put only three and a half percent down, which is what F H A requires, or in certain case you get a chaff loan, we have chaa here and other states have the equivalent of chaa in Colorado, CHAA stands for Colorado Housing and Finance a. Okay. And other states they have similar, we're basically down payment assistance programs to help offset that three and a 5% for households who can't afford that. And they file a lien against the property so they can get their down payment money back. Okay, so these are government funded down payment programs. Well, when these loans go bad, and keep in mind they go bad at a higher percentage than established buyers, you got a guy who put very little money down in the home. He's an inexperienced homeowner, he's still getting his life started. Right. He may not be over that seven, eight year hump where most marriages, not most, but a large percentage of marriages end in divorce, right? He's early on in his career, so he is more prone to layoffs or changes in careers as things changes not as established, right? All these things factor into a higher propensity for these houses to default. Okay. And when they default, the government steps into the bank that lent the money, makes the loan whole with the F H A insurance, right? And then takes the pro, the government takes the property as collateral. It ends up here on the HUD home store site. Okay. All of this is a long road to get there, but the net result guys is these are opportunities for us real estate investor types. Okay? The government has very little interest in owning a bunch of properties to sell on the open market. They don't know what to do with'em. They literally foreclosed. They just, in recent, you're not super recent, but in the early stages they didn't even winterize them. And that was a big problem in Colorado cuz those pipes would freeze and they'd bust and there'd be all these problems. Over time, they hired asset managers cause they realized how much money they were losing and not at least getting the waters outta the pipe system. But they don't know how to sell these homes. The marketing is generally really, really bad. The pictures are bad sometimes. I bought a HUD foreclosure, uh, years ago that the agent forgot to list it, right? So it was on the HUD side, but it never made it to. MLS as a whole. So the only people who knew about that property at all were real estate investors who were interested in the hut property. Needless to say, I got a great deal on that one. Right. But the reality of the HUD market is it's there. They, they have a bidding system. There's a hidden reserve. You can generally get the property or there's no competition. You can get the property for up to 10 to 12% below asking price, not all the time. Certain markets are hotter than other ones, but these are tend to be good opportunities for real estate investors. Okay, so this is just one of many places that I talk about in my hidden Foreclosure deal's book that you can download for free and discuss how we get into HUD foreclosures all the time. But for those looking to buy a property to live in it, right, and they wanna buy a deal below market to live in, you can buy a HUD foreclosure for a hundred dollars down. You don't even need the huge down payment with these properties cuz the government is eager to offload these things before they be. They get a huge inventory of properties that they don't know what to do with. Okay guys, are you hearing the opportunity knocking? Do you hear what that means for you as an investor? Listen, you've gotta take advantage of this, and if you're not sure where to get started, that's where the coaching kicks in, right? You could probably figure it out on your own, but why do so? So the tactic of today is you're gonna wanna hop on a hud home store.com and know the difference between. Two of the HUD types of property li that are listed, and I'm just gonna pop this open one more time so you can see it. Okay. Because there are two types of properties here on hud. The first one is the exclusive property. Do you see how it's tagged there? Exclusive. What that means is you can only buy that property as an owner occupant. Or nonprofit organization or government agency, right? I, I don't know how many nonprofits are out buying houses, but definitely something that that's been set up. It's been set up that nonprofits have bought homes, and in this first 30 days, generally of the property being listed, it can only go to people who are gonna agree to occupy the property for a minimum of a year. Okay? So this is the long game, right? If you're buying a deal, you're buying a property and you're gonna live it it, and work on it. That's how I got my first. Okay. It's a little bit of a hassle to live in your property, Walt's construction zone. But are you trying to get rich or are you trying to have convenience? Right. So this might be an opportunity for you to buy a deal for as little as a hundred dollars down. And then if they're exclusive only you can bid on the property. The second only use an owner occupant can bid on the property. Okay? So you gotta agree to live there for a year. The second type is the extended period. And extended is when HUD was unable to sell it to an owner, rock buyer, right? Largely because of pricing and condition. Maybe the property was just too rough. This property though, in Greeley, Colorado, don't look too bad to me. Right, but they didn't, they weren't able to sell it to an owner occupant. Why? Because the market is slow. How many people, even on a$300,000, which is still an entry level property, how many people are gonna spend 300 grand on a property and then want to spend another 20,000, 30,000 fixing it up? They just aren't. That's, that's reality. People don't, most retail consumers don't want to go through that. That's the opportunity for US investors, particularly in this market. Okay, with this higher interest rate, buyers are going to be increasingly picky. Their payments went up. Okay, so when you deliver a nice product to those buyers, you're gonna get an opportunity because they really, really want to buy a nice property and nice property. It varies based on the eye of the beholder, right? Maybe you gotta paint it, maybe you gotta carpet it. Maybe you gotta put cabinets and countertops in. When you get the coaching on your specific deal, we talk about fixing the home to market, not to your interests or desires, but rather what the market requires to get it. Okay. And a lot of times it's much less work than these flipping shows would have you believe. Okay. But now that you can go to HUD HomeStore and see the properties that US investor types can bid on, you've got an opportunity to start looking at that as one of your sources of deals. And stay tuned, because I'm working on a mini course that is just gonna tackle. HUD foreclosures, right? It's gonna allow people who are trying to get started in that market. I'm super excited to get that content out there. Cause I'm asked questions about HUD deals all the time, and it's just, they're kind of, you know, if you don't know what's going on with them, they're, they're a, a, not difficult, but different deal to put together. And that's why a lot of people just don't do HUD foreclosures. Okay, so the third thing I was gonna mention, remember we talked about mindset, tactics and tools on the show, I was gonna mention the HUD home store app, which I loved by the way, but I haven't used it in a while. So I went to download it again and they haven't updated it in so long. Keep in mind that HUDs have been kind. Out there, right? There hasn't been much HUD's action in a long time, that it's not even compatible with the current, uh, apple iOS. I can't speak for Android, but I can tell you that the current version of it will not work on the current iOS. That was gonna be my tool for you guys for today is the HUD home store.com app. I loved it because if I was in a different city or if I, you know, if I was like in a different place that I'm not super familiar with, I could pop it open and it worked off a gps so I could find HUD listings just by like I was in Vegas with my wife for the weekend. I'd like, Hey, let's go see some properties, you know, and I'd pop home the HUD home store app. Obviously I could just search by Las Vegas, which you could do that now and look for it on the HUD home store site. But I'd love to have the GPS tracking cuz I could see how far. The HUD listing was just that it collapse. That was a pretty cool app. Unfortunately, if you're an Apple user, it doesn't function anymore. If you're an Android user, it might check it out. Let me know. Hop in the group and let me know if it's still working for Android users. I don't have an Android phone to test that on, so I can't do that for you, but just one of the opportunities that are out there. So guys here, here's the bottom line. I'm gonna wrap up so we can kind of conclude the show today. The opportunities are out there, okay? And we're finding them all over the place. This resurgence. FHA foreclosures should be a leading indicator for what the future of the foreclosure market holds in general. Okay? This is a sign. Don't wait till two years from now and say, well, nobody told me a bunch of foreclosures were coming to the market. Okay? Because I'm telling you right now that I'm watching it happen in real time. And it's happening on the HUD sites. We're seeing it in VA repos. We're seeing it across the board because the market, the economy, is now conducive to investors. And here's the best part. A lot of the super veteran investors are like, well, if I don't make 50 to 80 grand on a deal, I just ain't doing the deal. Right. They, they've made, they got spoiled by all that traffic back then. My clients are being prepared with the expectation that a good deal is 25,000 or more in. Okay. And how much would 25,000 impact your life right now? Right. You keep your job or not? Could it be extra coin for you to add to your. Income, or if you really wanna scale this thing, you could do 47 flips in a year like I did. Okay? I don't recommend it. I can tell you it was a very stressful time. I think this is better served as a decent high side hustle, excuse me, where you're doing four to 12 of these a year, and it's a great amount of income that you can use to invest in long-term passive assets. So we invest in foreclosures because we wanna produce an income above and beyond our current income so we can invest in passive assets and get to retire. Much sooner. Does that make sense? Right. So I want you guys to be a part of that discussion. So here's the thing to get going on this. They're the links to everything we discussed. You're gonna be, and the, and this show are gonna be in the description below. So click on that and please get involved in the conversation here. Join my group, the Foreclosure Deals coach email@example.com. And of course, tune in each and every single week for more insights on the foreclosure investment. Once again, this is Donny Coram thanking you again for tuning into the show and reminding you now and always don't buy a house. Buy a deal. Thank you for tuning in to the Foreclosure Deals Coach Podcast. If you like what you heard here today, remember, new episodes are uploaded weekly. Subscribe wherever you listen to your podcast. Do you want more of the foreclosure deals? Coach, are you ready to learn the mindset, tactics, and tools required to be a. Successful real estate investor. If so, click the link below to schedule a one-on-one coaching Call today with Coram, the Foreclosure Deals coach to determine if coaching is right for you. And remember, don't buy a house, buy a deal.