Hi, allow be to tweak this a little, 20% profit, you could buy a 100K house, put 40K in it and sell it for 160K. I believe it's also 90 days to conveyance, not contracted....Bill
Nope, not 20% profit, actually 20% above *purchase* price...in fact, it doesn't even say "20%" anywhere in the addendum, it refers to a specific dollar amount, which is 20% above the purchase price.
Here is the exact wording from the FNMA addendum:
"GRANTEE herein shall be prohibited from conveying captioned property to a bonafide purchaser for value for a sales price of greater than $____ for a period of ____ months from the date of this deed."
The asset manager fills in those two blanks (hand written), and in most circumstances the $ amount is exactly 20% above the purchase price and the time period is 3 months.
The only exception to this is when they forget to fill in those blanks (which happens about 20% of the time in my experience), in which case there is no restriction.
And yes, you can put the property under contract for sale at any time...you just can't close for 3 months...
For the most part, you can wholesale them the same way you wholesale any other REO properties -- using a simultaneous/double close, a land trust, an LLC sale, etc.
But, keep in mind that FNMA will often put a deed restriction on their properties that disallows the property to be sold within three months for more than 20% above the purchase price. So, if you buy a property for $50K, you won't be able to sell it for more than $60K within the first 90 days.
As a wholesale, this is probably okay, but it's something to keep in mind.
Other than that, they can essentially be treated as any other REO property...
For the most part, you can wholesale them the same way you wholesale any other REO properties -- using a simultaneous/double close, a land trust, an LLC sale, etc.
But, keep in mind that FNMA will often put a deed restriction on their properties that disallows the property to be sold within three months for more than 20% above the purchase price. So, if you buy a property for $50K, you won't be able to sell it for more than $60K within the first 90 days.
As a wholesale, this is probably okay, but it's something to keep in mind.
Other than that, they can essentially be treated as any other REO property...
hey thanx J scott
is that the 90 rule that has been lifted for a yr?
is that the 90 rule that has been lifted for a yr?
Nope, different restriction...
The 90-day rule is a restriction on the buyer to buy the house (via FHA financing)...
The FNMA restriction is a restriction on the seller (the property, actually). It says that the property can't be sold for more than 20% above your purchase price for three months after you've purchased it.
So, the FNMA restriction is actually worse, as it disallows you from selling to anyone (for more than 120%), whereas the FHA rule is only in regards to selling to an FHA buyer.
Hi, allow be to tweak this a little, 20% profit, you could buy a 100K house, put 40K in it and sell it for 160K. I believe it's also 90 days to conveyance, not contracted....Bill
Hi, allow be to tweak this a little, 20% profit, you could buy a 100K house, put 40K in it and sell it for 160K. I believe it's also 90 days to conveyance, not contracted....Bill
Nope, not 20% profit, actually 20% above *purchase* price...in fact, it doesn't even say "20%" anywhere in the addendum, it refers to a specific dollar amount, which is 20% above the purchase price.
Here is the exact wording from the FNMA addendum:
"GRANTEE herein shall be prohibited from conveying captioned property to a bonafide purchaser for value for a sales price of greater than $____ for a period of ____ months from the date of this deed."
The asset manager fills in those two blanks (hand written), and in most circumstances the $ amount is exactly 20% above the purchase price and the time period is 3 months.
The only exception to this is when they forget to fill in those blanks (which happens about 20% of the time in my experience), in which case there is no restriction.
And yes, you can put the property under contract for sale at any time...you just can't close for 3 months...