Investors--Slow Down the Renovation

I have seen the progress of of several residential investors move into the foreclosed market like vultures to sccoop up forclosed properties. That aint going away. They will continue to provide stiff competition for the first time buyer as they show up on the front door with their 20% down and no strings attached offer. That is beautiful because homes are moving.

I have had the opportunity to watch a few of these guys do their planning ahead of time and the first renovtion project they tackled took a good two and a half months. After the first home was completed and sold they had the idea of what the consumer would pay for. A beautfully staged home/townhome goes a long way to capture the gaze and the signature of a buyer. The second home becomes a snap especially if it is the same model home. In come the subcontractors and voila, in 30 days or less a home entirely gutted and transformed into a buyers dream.

Now, Slow Down the Renovation. FHA loans for most all buyers in the low end market are utilizing the FHA loan. Property flipping comes into play. Here are the regs if FHA comes into play with your buyer: You cannot write a contract prior to 90 days of your purchasing the property otherwise the Property Flipping Rule comes into play and the underwriter of the loan will reject the loan. You can re-write a new contract and date it after the 90 day expiration. So please exercise some caution in timing the contract of an excited buyer going FHA. If you are moving at a great speed to get in and out of the project then consider renting the place for a month or two to the QUALIFIED buyer, then write a contract for the purchase after the 90 day period. Also make sure there are sold comps in the last 30 days to strongly support the above market price. Appraisers do appreciate nice renovation work but if you are in a neighborhood of foreclosures, you will have some drag on your beautiful project. You may forging the new path for pricing in that neighborhood so be patient and price it to the ede of what the market will support

If you have questions please do not hesitate to call me at 703-444-6407. Happy renovating!!