Most brokers and banks wont due to new seasoning laws which state that you have to own a property for a year before selling. But I have creative financing programs to get around that and get the simultaneous "flips" transactions done.
flip to buyers who don't use FHA, rehabbers or retail buyers that you have use your mortgage broker, do a search for this, there was a discussion on this a while back
I just read an article about this from HUD, written by John Weicher who is the assistant Secretary for Housing- Federal Housing Commissioner. Feel free to email me, and I will forward the article to you (look on my profile.) Anyway, this is what I read and understand. You can not flip a property within 0-90 days. Very few exceptions. 91-180 days, you can flip if the "resale price to FHA mortgagors is less than 100% greater than previous sale" or "if 100% or more greater than previous sale, second appraisal supports value."
Hope this helps
Derek
Non-conforming loans are becoming more and more restrictive. I recently arranged financing for a buyer which was a non-conforming loan that required that the property be owned at lease 12 months prior to the sale. I used the POA approach to close the deal as described under the topic 'simutaneous closings.'
Develop a relationship with a good loan broker who understands what you're trying to do. They can help you keep up with what lenders are requiring and help you find the right approach for your deals.
I also have a situation with a home appraised at $550k, will sell to a buyer for $450k. Am I still in the guidelines for a "flip" without raising a concern with anyone? There is still a $100k equity
My take: you cannot sell unseasoned loans, less than 1 yr or else it's considered a flip. When you sell your property the new lender will check title for seasoning. For rehabbers, they will want to see contractor expenses, etc and generally limit the profit to 20%. (+/-) I have not looked into the solutions, but I'm sure they exist, even if not exactly conventional.
[addsig]
On the so-called 90 day rule, could you sell the property on a lease-option to override the 90 days. would this way work or do you still have to season for the 1yr to bypass the "flip" rule??
TommyK, Go to the Wholesale/ Subject-to section of the forum and there is some detailed answers on the flipping questions you need answered.. that should help you.. Good Luck!
Quote:Am I reading right. Is there no more flipping? Or is it just for hud homes? I lost. I do not understand any of this. Someone please help me!
HI JW Nice to meet you...
Whenever I quick turn a property that has a fair amount of equity in it...I have the seller agree to grant me POA to unlod their home, place it into a Land trust showing the original seller as the Beneficiary...
This puts the "flipping" issues to rest and allows for me to still control the deal.
I mkt the property to resell to a retail buyer and his lender/underwriter have no reason to cry foul ounder the new HUD rule as their is no sales transfer of the title only the recording of a title-holding trust.
I works well for those deals you want to quickly turn over and resell to capture the equity spread with NO SEASONING ISSUES!
I thought that might work but I don't know how the Power of Attorney adequately protects you from the property incurring later liens prior to you getting title transferred to the new buyer?
There's a very easy way to get around this problem. Instead of flipping the property just assign the contract. Make sure you are listed in the origional contract as the buyer in your name or company AND/OR ASSIGNS. Have a buyer lined up, then assign the contract to your buyer and collect an assignment fee.
That's because it is still a very profitable and ethical way to make money in the real estate business. It's a shame that there are unscrupulous investors out there who have made the term "flipping" a dirty word.
For FNMA owned properties, they issue an addendum that they have the buyer sign that specifies that 'no assignment' of the contract can take place (besides other restrictions.) So you must have the property under your name before you can actually flip it or resell it to another buyer.
I suppose you can try to counter that line in the addendum, but you will risk losing your previous offer from being accepted. It really just depends on how much the bank wants to get rid of the property.
Most brokers and banks wont due to new seasoning laws which state that you have to own a property for a year before selling. But I have creative financing programs to get around that and get the simultaneous "flips" transactions done.
What are some of the ways to flip propertys, in spite of the new laws.
flip to buyers who don't use FHA, rehabbers or retail buyers that you have use your mortgage broker, do a search for this, there was a discussion on this a while back
I just read an article about this from HUD, written by John Weicher who is the assistant Secretary for Housing- Federal Housing Commissioner. Feel free to email me, and I will forward the article to you (look on my profile.) Anyway, this is what I read and understand. You can not flip a property within 0-90 days. Very few exceptions. 91-180 days, you can flip if the "resale price to FHA mortgagors is less than 100% greater than previous sale" or "if 100% or more greater than previous sale, second appraisal supports value."
Hope this helps
Derek
Way_Motivated is correct.
As long as you are not "flipping" (I really hate that word) according to the new rules then you have no problem.
When we resell we do so with the new buyer refinancing in 2 years and offer owner financing to the buyer for the time prior to that 2 year period.
We have been buying and selling like this for years, so this new law will have no effect on the way we do business.
Best of luck
John (LV)
Non-conforming loans are becoming more and more restrictive. I recently arranged financing for a buyer which was a non-conforming loan that required that the property be owned at lease 12 months prior to the sale. I used the POA approach to close the deal as described under the topic 'simutaneous closings.'
Develop a relationship with a good loan broker who understands what you're trying to do. They can help you keep up with what lenders are requiring and help you find the right approach for your deals.
I also have a situation with a home appraised at $550k, will sell to a buyer for $450k. Am I still in the guidelines for a "flip" without raising a concern with anyone? There is still a $100k equity
My take: you cannot sell unseasoned loans, less than 1 yr or else it's considered a flip. When you sell your property the new lender will check title for seasoning. For rehabbers, they will want to see contractor expenses, etc and generally limit the profit to 20%. (+/-) I have not looked into the solutions, but I'm sure they exist, even if not exactly conventional.
[addsig]
Im confused. What law?
On the so-called 90 day rule, could you sell the property on a lease-option to override the 90 days. would this way work or do you still have to season for the 1yr to bypass the "flip" rule??
TommyK, Go to the Wholesale/ Subject-to section of the forum and there is some detailed answers on the flipping questions you need answered.. that should help you.. Good Luck!
Quote:Am I reading right. Is there no more flipping? Or is it just for hud homes? I lost. I do not understand any of this. Someone please help me!
HI JW Nice to meet you...
Whenever I quick turn a property that has a fair amount of equity in it...I have the seller agree to grant me POA to unlod their home, place it into a Land trust showing the original seller as the Beneficiary...
This puts the "flipping" issues to rest and allows for me to still control the deal.
I mkt the property to resell to a retail buyer and his lender/underwriter have no reason to cry foul ounder the new HUD rule as their is no sales transfer of the title only the recording of a title-holding trust.
I works well for those deals you want to quickly turn over and resell to capture the equity spread with NO SEASONING ISSUES!
I hope this helps!
Derrick Ali
Derrick: Sweeeet.
[addsig]
Derrick:
I thought that might work but I don't know how the Power of Attorney adequately protects you from the property incurring later liens prior to you getting title transferred to the new buyer?
Story17
It's not the POA but the Trust itself that 'buffercates' the title from Creditors, State and/or Federal Liens.
The POA is used to give you the authority to close and direct the proceeds of the sale.
Make sense???
Derrick Ali
This is a link to an Article that William Bronchick thought would be helpful.
The legal vs illegal aspects of Flipping.
http://www.inman.com/hstory.asp?ID=35919&CatType=R
John $Cash$ Locke
There's a very easy way to get around this problem. Instead of flipping the property just assign the contract. Make sure you are listed in the origional contract as the buyer in your name or company AND/OR ASSIGNS. Have a buyer lined up, then assign the contract to your buyer and collect an assignment fee.
For there being new laws in effect it seems that there is a lot of it still going around
That's because it is still a very profitable and ethical way to make money in the real estate business. It's a shame that there are unscrupulous investors out there who have made the term "flipping" a dirty word.
For FNMA owned properties, they issue an addendum that they have the buyer sign that specifies that 'no assignment' of the contract can take place (besides other restrictions.) So you must have the property under your name before you can actually flip it or resell it to another buyer.
I suppose you can try to counter that line in the addendum, but you will risk losing your previous offer from being accepted. It really just depends on how much the bank wants to get rid of the property.