Residential Real Estate Broker · Grand Blanc, MI · Member since 2008 · 885 posts · 316 votes
I have located a desperate seller who is offering me a great deal on her property. The house needs some repairs, but I only plan on doing the essentials to make it sell quickly (repair a leaky basement, paint the entire interior, and new carpet and tile). It really needs new vinyl siding and windows to be up to the neighborhood par, but I don't plan on going that far with it.
She's offering it at 28K and I plan on putting 5K into it. She'll finance it on a land contract. I should have this mild rehab done in a matter of six weeks, tops. I'll then relist it. ARV is $90,000 (assuming new siding and windows). But I plan to relist it for a quick sale for $59,900.
How can I get around the seasoning issue? Since it is on a land contract, would I be doing any harm by not recording the transaction? This would be a perfect starter home for someone...but I don't want to exclude an FHA mortgage thanks to seasoning. Any ideas on how to get around it?
There are no ways to get around seller title seasoning. If you sell FHA, you've got to own it for 90 days. You can enter into a new contract on the 91st day.
You may be able to find a conforming lender with no seasoning requirement, provided you adequately document the improvements.
Residential Real Estate Broker · Grand Blanc, MI · Member since 2008 · 885 posts · 316 votes
17y
I thought I had to own it for 6 months if the buyer was going to be FHA. I have no problem holding onto it for 91 days, assuming there are no other constraints.
Wholesaler · Columbiaville, MI · Member since 2008 · 46 posts · 1 vote
17y
Mark,
What city is this property in? I work with a lender that does Rural Development loans, and I haven't run into the seasoning issue. Record your Memorandum of Land Contract, and you have a title interest that begins to season, if you do need to go FHA. 91 days isn't bad if you have seller financing in place, etc. BTW, why not offer it for more with your own seller financing? I bet you could get even more, and generate some good cash flow and not just a quick check. Just a thought. Call me.
Real Estate Investor · East Lyme, CT · Member since 2008 · 78 posts · 10 votes
17y
Keep in mind many FHA lenders will not allow the process/contract to start until the 91st day. So it may be more like 120-160 days you will need to hold it. Good luck with your deal.
Real Estate Investor · Charlotte, NC · Member since 2008 · 368 posts · 42 votes
17y
Since you really won't have anything into this property, why not just wholesale the deal and move on. Why would you sink money into it and not be assured that you can get the money back out in the end.
I would personally SALE it wholesale and then find a few more like that one. This sounds like a deal you might want to consider keeping and renting out. But, you are probably not wanting to be a LANDLORD.
Residential Real Estate Broker · Grand Blanc, MI · Member since 2008 · 885 posts · 316 votes
17y
I have thought about wholesaling it....but there's one problem: I'm putting the cart before the horse because I don't have a buyer's list. That's OK though, because I'm going to follow Steve's advice and resell it with owner financing.
This gets me out of the seasoning non-sense and I won't rehab it. I'll simply sell it as a "fixer-upper". The location of this property is prime. If I can't resell it, I will rent it out. I would like to start moving away from SFH rentals (already have a handful), but if I can't resell it I'll hold this one for the time being.