HUD Homes Require Seasoning?
I am planning to purchase a HUD home in TX as an investor using hard money or conventional financing. My realtor told me that HUD requires you to hold on to the property for at least a year. I told her to double check on that for me because I've heard different things from different www.people--e.g. no seasoning if i'm using conventional financing or hard money, or 3 months seasoning, or 6 months. I couldn't find anything about it on HUD's website. Can someone who has done this before clarify or verify what their policy is and ramifications if you break it? Thanks for your help.
What I am trying to do is purchase the property, rehab it, and resell. I am willing to hold onto the property for 3 months but not much longer. Ultimately I could lease option it out if i really do have to wait a year, but preferably not!
As an investor, using non FHA financing, you can sell the day you buy the house. I think your realtor is getting confused with the owner occupant requirement which requires an owner occupant buyer to live in the house at least one year before selling or renting. If you represented yourself as an owner occupant and then sold the property within a year the penalties could be stiff if HUD decided to make an example out of you.
RewardRisk is correct, you only have to hold 12 months IF you are owner occupant, since they get a substantial advantage in the bidding. Bids are closed to everyone except O/O's usually the first week or 2, so investors who represent they are O/O to land a bid have an unfair advantage, since there is more latitude for O/O's in accepting a bid. No worries if you bought as an investor, sell it anytime. I do this with decent success, although the HUDs usually take a fair bit of fixup. Best of luck!
awesome, thanks for all the clarification!
By conventional financing, I assume you mean financing that is from an institutional lender and is not an FHA insured loan.
Be aware that some conventional lenders also have title seasoning requirements. Many do not.