Investor Flip Properties are a great alternative to short sales... However there are rules and guidelines that must be followed when purchasing with an FHA loan. If it is an Investor Flip... The house is considered a standard sale. And Usually.... the house is in move in condition. Often properties have been upgraded... cleanup of property, new paint, possible new flooring, sometimes new appliances and other repairs or upgrades needed to make this home more desirable to buy. Most of the Investor Flips are from Investors who pay cash on court house steps.... upgraded the property for a resale so they can make a profit.
You need to know if this standard sale is an Investor Flip property if you are purchasing FHA because the following rules will apply to any property that is within 90 days of purchase date. If it is... the following conditions must be followed in accordance with FHA guidelines. 1.) A 2nd Appraisal is required if your purchase price is greater than 20% profit within 90 days (the buyer can't pay for 2nd appraisal fee). Either your lender or the Investor can pay for 2nd appraisal. 2.) Home inspection is required on all flips (all repairs called out by appraiser must be fixed by seller prior to funding). 3.) Health & Safety repairs (Any repairs noted on inspection report must be repaired prior to funding). 4.) All transactions must be arms-length...NO identity of interest between any parties.. Investor cannot use their escrow company. 5.) A minimum 12-month chain of title required. Which also means, Property cannot be flipped twice in past 12 months.
Please bear in mind... even if there appears to be a 20% profit... does not always mean there is... most lenders will not consider money that Investor used to upgrade and repair property as part of the cost of the home. These homes are great to purchase for home buyers who... do NOT want tot deal with short sales, Who do not have money or time to repair distressed properties and homes can close in a reasonable time frame. Although people say they will be patient with short sales... after a few months they are not patient and get very frustrated at the process!!!
In Your Home Search, Whatever you are looking for... we have something that fits just about anyone's wants or needs. Feel free to call if you have any questions regarding our Real Estate market and Yes... that includes standard sales and short sales.
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