Thursday, July 1, 2010

Real Estate Investor Info Regarding Flipping

A "flip transaction" is defined as a purchase for a transaction for a property that has been acquired by the seller in the past 12 months and is being re-sold at a higher price.

With great deals available today from short sales and foreclosures and incredible interest rates, there are a few things you as an investor should know regarding obtaining financing to purchase an investment property to "flip".

FHA had a 91 day rule on properties meaning that the property title had to be held a minimum of 91 days before the property could be resold. That FHA rule has just been temporarily repreived until February 1, 2011 according to Pat Griffin of Greater Atlanta Financial Services. Some important things to remember though are...
1) the seller must be on public record (some counties take more than 6 weeks to file deeds and this can cause a delay to close).
2) If the property is being sold for more than 20% of the original purchase price the seller paid for the property, two appraisals will be required and the buyer must receive a property inspection report.
3) The seller must provide information on improvements made to the property and supply invoices for the work completed.

Buyers using a conventional loan to purchase a property held less than 90 days will be required to put 20% down. Mortgage insurance companies are not insuring these transactions. A second appraisal is also required for conventional loans for a "flip" purchase.

If you are an investor who is planning to quickly resale your investment purchase for profit, these guidelines are important to keep in mind when accepting an offer from your buyer as it is imperative to scrutinize the buyer's disclosed financing options. And if you are a buyer who wants to buy a home that has been recently purchased and renovated or "flipped", you must know these guidelines in order to get a loan.

This information was provided to me from Pat Griffin of Greater Atlanta Financial Services, a Wells Fargo affiliate.

No comments:

Post a Comment