BiggerPockets

We've lost out on a good number of houses because of the banks putting restrictions on investors putting in offers for the first 15-30 days on foreclosures. I understand why they do this and of course it probably helps to get owner/occupants in the houses but boy is it frustrating for investors like myself and unfortunately I don't see away around it.

Do you all see a lot of this as well where foreclosure listings say owner/occupant offers only for the first 15-30 days?

Some other banks are starting to do this as well, and it is definitely frustrating. It wastes a lot of time too, because we always feel like we have to look at them anyway to be ready to put in offers on day 16, and then hope they're still available.

Since we're out there looking at these anyway and putting together estimates, we've thought about trying to find some OO buyers and helping them find these houses and then running their renovations for them before they move in (kind of like that show "Property Brothers"). The thought is that we would make a little less money than buying and flipping, but not take on the risk of holding the property. The roadblock seems to be financing, especially the renovation part, with mostly first-time buyers. Has anyone else considered or tried doing this?

I agree that it's not just FNMA and FMAC. Just about every foreclosure listing in our area has gone to OO for the first 15 days. Seems now a days it's getting very rare to find a foreclosure where this isn't their policy. Back when we bought our first couple foreclosures we didn't see the time restrictions for investors.

I wonder what the legality of it is. Do the banks have a loop hole to avoid discrimination? Or is it different with selling a house compared to renting one. As with renting you can't discriminate who you rent to but maybe with selling you can?

Investors are not a protected class, so this restriction is not "discrimination."

I have been looking almost exclusively at FNMA Homepath properties in my market for the past few months and have had a number of properties that I was interested in go to owner occupant buyers during the First Look. However, even if they were taken by an OO buyer I still made offers on them anyway betting that some of them wouldn't close and FNMA would come back to me as a back up offer. Sure enough after a few offers that didn't work out one of the OO buyers cancelled, and FNMA offered the deal to me. My docs will be at title tomorrow!

I'm super excited because the property cash-flows well, and I was able to qualify for the 10% down FNMA Homepath financing, which, as you might expect makes my cash-on-cash & ROI numbers work great. (I also was super lucky and have it rented prior to even closing).

I'm sure this won't work in all areas or with all banks, but patiently putting in offers on these things is working well for me.

Good luck!

I agree it's a frustrating rule but as a long term investor it doesn't bother me that much because an OO buyer will be engaged in the neighborhood and stabilize it. I don't want to be invested in a neighborhood with a high percentage of rental homes.

Drives me nuts... Most of the homes need work, that you know low income buyers will not have the funds to perform..

The result is the homes continue to go down hill, and continue to drag down the neighborhood.

It's a viscous cycle funded by tax dollars.

WHY can't you go after short sales then as an investor??

Short sales do not have this OO restriction.Look for properties that are real run down.

The short sale department and foreclosure department have different objectives.

Yes there are a bunch of issues with short sales.Any strategy you implement has work involved to make money.Anyone telling otherwise is not telling the truth.Competition exists in anything worth pursuing in life.Accept it and work to be better than anyone else.