New laws for "flippers"
Hi All,
Just thought you all should read this article put out by HUD. The laws will be changing for a lot of flippers.
http://www.hud.gov/news/release.cfm?content=pr03-055.cfm
Hi All,
Just thought you all should read this article put out by HUD. The laws will be changing for a lot of flippers.
http://www.hud.gov/news/release.cfm?content=pr03-055.cfm
So, is it that real estate investors will no longer be doing flipping?
Actually, you can still flip but there are some roadblocks. If you go to www.rementors.com there is an excellent rundown of the article by Jim. It is his website and as far as I'm concerned there is no investor that gives top notch advice like Jim. Check it out. He explains everything pretty well.
Bill
It would definitely appear that the FHA is trying to stop the "quick flips/wholesaling" of houses. There have been instances of unscrupulous investors, appraisers, and lenders (in kahootz with each other) that have been taking big advantage of unsuspecting want-a-be homeowners by over-inflating the sale price. This legislation is an attempt to get this form of corruption under control. I agree that it was needed.
The biggest block I see is that the sales contract can no longer be "sold or assigned". The transaction must now be between the owner of record and the buyer, no middlemen!
I also noticed the requirement for a minimum 90 day "seasoning of ownership" as well as the use of an independent appraiser.
Rehabbers shouldn't be effected that much by this new legislation. As far as quick flips or wholesaling is concerned, I suppose you could always use an "Option to Purchase" contract (which can be sold/assigned) as opposed to a purchase contract. You could do this by securing the "right" to purchase a property at a certain price (your Option). You can then sell/assign your "right" to purchase (Option) to an investor/homebuyer.
Anyone else have some thoughts on this issue?
[addsig]