Real Estate Investor · Champaign, IL · Member since 2012 · 30 posts · 1 vote
I know this has been covered a bit in the past (and yes I'm going through the threads). But I do have one question that I'm not 100% clear on.
Apparently, there is a "carry with the land" statement in the 90-day/20% restriction.
Just to be 100% clear... does this mean that, even if I pay for the property in full, 100% cash, I'm still not allowed to sell within 90 days and more than 20% profit?
Just seems strange that such a restriction would continue to apply once the property is fully paid for.
I ask because I'm staring at a great wholesale deal (would be my first). The price is $79/sq. ft. and similar houses in the area (like within a few blocks) are going for $130-150/sq. ft. I believe I can wholesale this but my only hesitation is that it is a Fannie Mae property.
I'm aware of the 'trust' workaround and will most likely use that method and pursue this.
You're confusing the FNMA resale restriction with the FHA resale restriction -- they are two very different restrictions.
The FNMA restriction is still in force, and restricts someone who purchases a FNMA foreclosure from reselling (or otherwise encumbering) the property for 90 days after purchase for more than 120% of the purchase price.
The FHA restriction (which has been waived since 2010) restricts FHA buyers (the people you might want to sell your rehabbed property to) from getting a loan on an FHA property until the seller (you in this case) has owned the property for at least 90 days. But again, that restriction is currently waived through 2012.
And again, the FNMA restriction is still very much enforced.
Just to be 100% clear... does this mean that, even if I pay for the property in full, 100% cash, I'm still not allowed to sell within 90 days and more than 20% profit?
That is correct. Within the first 90 days after purchase, you are not allowed to resell or encumber the property for more than 20% above the purchase price.
And yes, this is a deed restriction, so it runs with the land, not just you as the purchaser.
NEW YORK (CNNMoney) -- Flippers, the real estate investors who buy homes on the cheap and quickly resell them at a profit, just got a reprieve from the Federal Housing Administration.
In an effort to help stabilize housing prices and unload some of the foreclosures that are flooding low-income communities, the mortgage insurer extended a waiver of its anti-flipping regulations through 2012.
The waiver, which was initially issued in 2010 and set to expire this month, suspends regulations that prohibit the agency from insuring mortgages used to purchase homes that are bought and resold in less than 90 days.
"This extension is intended to accelerate the resale of foreclosed properties in neighborhoods struggling to overcome the possible effects of abandonment and blight," said Acting Federal Housing Administration Commissioner Carol Galante.
Low-income neighborhoods are particularly plagued by foreclosed homes that lower property values and act as magnets for crime and other social ills. Real estate flippers often rehab these damaged homes before reselling them, improving conditions for neighborhoods.
You're confusing the FNMA resale restriction with the FHA resale restriction -- they are two very different restrictions.
The FNMA restriction is still in force, and restricts someone who purchases a FNMA foreclosure from reselling (or otherwise encumbering) the property for 90 days after purchase for more than 120% of the purchase price.
The FHA restriction (which has been waived since 2010) restricts FHA buyers (the people you might want to sell your rehabbed property to) from getting a loan on an FHA property until the seller (you in this case) has owned the property for at least 90 days. But again, that restriction is currently waived through 2012.
And again, the FNMA restriction is still very much enforced.