I was never a big fan of Hubzu until recently one of my clients closed a deal with them fairly straight forward. I want to share with you a story from one of my client, G.W and how he was able to add another great deal into his rental portfolio.
If you never heard of Hubzu before, it is simply an Ebay of investment property where you can actually buy investment house online, sight unseen (If you want to). Just like any other deals, we ran into a couple of hurdles but at the end, we were able to execute the deal at the closing table. It was a quite interesting deal, so I want to share it with you.
G.W and I knew each other from a mutual friend via Bigger Pockets offline meetup. If you haven’t been on the site yet, make sure you do. Besides top-notch educational material, the connection you makes on the site is priceless. Long story short, we met up and G. expressed his interest in buying income producing asset and we somehow landed on a deal from Hubzu. Here are the step we took
1.Bidding: Hubzu now actually made it easy by letting the buyer place bid instead of only licensed agents. What if there are 10 minutes before the auction end and you can’t reach your agent?
2. Bid Re-submission: Don’t get frustrated when they ask you to resubmit the bid highest and best even though you are the highest bidder. It is simply how Hubzu operates. Know your number and submit your real highest and best, and don’t get caught up in the bidding war.
3. PSA (Purchase Sale Agreement): If you are the highest bidder, they will award you the bid and send you and your agent the PSA (Purchase Sale Agreement). Hubzu does not use TREC contract and most of the wording on the PSA protect the seller more than the buyer. There is no way that of I know to get around this PSA. It will outline pretty much everything from the cost, who is the title company and what’s the next step.
- There is a $299 Tech fee, $4,005 Buyer Premium on top of every transaction with Hubzu. They will pay for all the title cost if you select their title company, or you could select your own title policy at your own cost. We decided to select our title company to have more control over the process and able to close the deal before schedule.
4. Escrow and closing: Most of the property for sale on Hubzu is bank owned and they already did the hard work of clearing the title for you. If you purchasing the property using cash or line of credit, you are pretty much ready to close after the title is clear. Work closely with the title company and your agent and stay on top of everything until the closing date.
5. Due Diligence: This should have been number 1 but I want to save the best for last. Just like any deal, you have to buy it right. Hubzu made it difficult to perform due diligence, especially with the property that is tenant occupied. This is where you and your agent have to be creative to find a way to get access to the property and understand the current situation. It could be anything, from climbing the fence to making friends with the tenants. The options are endless. Be yourself, and have some fun with it.
G.W and I were able to position ourselves at the right angle and establish a good communication channel with the tenants. We were able to inspect the outside building and two unit out the four during our short 48 hours option period.
We knew exactly what we are getting into before actually signed the contract and send in earnest money.
In the end, one tenant even agreed to cook dinner for me because we were able to close before schedule and save her from being evicted by the previous owner.
That’s G.W and his story. What’s your would be like?