Attention Real Estate Investors! You Need to Know This!

While working on a listing lead from my Sphere of Influence, Patterson Group Investment Representation Specialist Troy Robinson comes to me with a thought-provoking scenario and question.

TROY: David. I have a client that is planning to purchase a property for the purpose of meeting their investment goals through "rehab flipping". She plans on rehabbing the property to meet ABOVE MARKET CONDITION standards. If we come across a buyer for this home in the first 45 days after purchasing it, are there any restrictions with obtaining funding through a FHA loan?

DAVID: Let's call Leah Avery with Bank of America Mortgage and get the answer.

LEAH: I'm glad that you called. I was putting together a FHA Funding presentation for several real estate groups throughout Columbia SC. Here is some information that should be on the minds of all rehab investors and home buyers.....

For a home to be resold through FHA FINANCING, the previous purchase of that home must have happened at least 91 days ago. Hence, if you purchase a home on September 3 of this year, you cannot get FHA Financing for the home until approximately December 4.

Furthermore, resales that occur between 91 and 180 days after the last transaction (SOLD) date have a 100% stipulation. If the home is being sold for more than 100% of the last sales price, FHA will require additional documentation (i.e. a second appraisal) to validate value of the subject property.

Therefore, if you buy a home at $70,000 and try to sell it for $141,000, you probably will see underwriters requesting additional documentation.

DAVID: That's some good information! I need to share it with the world!

Attention Real Estate Investors! You have been placed on noticed! This post is not meant to discourage. I'm in the education business! Now You Know..........and Knowing is Half the Battle!