If you like good news and happiness, check this out…
So back in January 2010 we reported (and rejoiced) that the FHA had decided to suspend the 90-day anti-flipping rule for 1 year.
The now-infamous rule was originally intended to prevent shady speculators from defrauding the government, but it also stifled the purchase and renovation of foreclosed homes by legitimate investors like you and me. Yep, dumber than a bag of hammers.
But the 90 day flip rule waiver in January 2010 effectively enabled qualified buyers to once again get FHA mortgages on properties that were acquired by rehabbers less than 90 days before. Great for them, great for us, great for the economy – thanks for the bone FHA.
And now, in an effort to keep up the momentum gained by the housing market, they’ve just decided to extend “anti-flipping rules” suspension for at least another year to increase FHA lending.
Yay for Sound Logic and Good Reason!
Yep, this is (again) great news for investors trying to flip properties to FHA Buyers. But (again) keep in mind the same caveats and important nuances apply…and you really need to be aware of them if you aren’t already…
- The seller must hold title (no back-to-back, same day closings)
- You still need short-term funding
- The 20% Rule still applies
- The property still can’t demonstrate a “Flipping Pattern”
If you want to read the original waiver from HUD, here it is. Or for a rather exceptional 😉 executive summary of these must-knows, you can read this FHA property flipping waiver post I put together with the first waiver.
So 2 Questions…
It’s nice to finally have something nice to say again about the FHA, isnt’ it?
My question to you is…
- How much or how little effect do you think this will have on the real estate market and/or economy?
- Also, how will/won’t this decision effect you personally?
Please post your comments below…
…jp
Doesn’t help unless the lending institution has their investors approve and adopt the policy. Easiest way around it is to properly adapt a trust into your deal structure. Take Care.
I still think the best way to sell these properties, even when I rehab them, is with owner financing. Yes, a quick 15-25% cash out is nice, but I guess it depends on your investment strategy. I’ve always made better money by cashflowing the property on a CFD, then cashing it out later. I always get the price I want and I don’t have to pay a Realtor commission. And, I don’t have to deal with the “iffy” banks and their anti flipping rules.
This hasn’t been officially announced yet. As of now its still speculation…
Personally, I’m more into buying them and renting them out.
I’ve never been a fan of flipping, mostly because the people
whoops, sent too soon. I meant that mostly because the people I know who did the flipping didn’t put the highest quality effort into redoing the home. I think the term “flipping” has been getting a bad reputation.
That is fantastic news for flippers and buyers. Many people need to use FHA due to the 3% down payment rule and other reasons, and not being held up by ridiculous government regulation is a great thing, just as you said.
BTW JP – you should look at taking away the mybloglog tracking stuff from this site, it severely holds up the loading of the page, and I think mybloglog has been shut down, or is going to be soon. Just a thought.
Hey, thanks for the heads-up, Jeffry. I didn’t think I had My Blog Log still active anywhere…I don’t see it…but when I look at the source code there’s still something left from it. I’ll look into it and see if I can get rid of it. Thanks!
…jp
Flipping can go either way – sometimes people don’t do enough to ensure the long term sustainability of the remodeling.
Hello Carl , thanks for the tip about the trust.. Would love to hear more about setting one of those up .. And If I could use the trust more than once; if I change the name but use the same format.. Please help all feedback is appreciated, thanks