JUST CLOSED A REO FLIP!!

37 Replies

Just closed a reo flip and profited 64K in 90 days due to the FHA seasoning! :D

Congats can you give us details about it?

Wow, thats awesome! And yes, give us details about the deal.

As the others have said before me, Congrats. Lets hear the details!

Still no details come on Andre spill the beans.

That's fantastic Andre! Let us hear how you did it!

Originally posted by Leesa Cramer:
That's fantastic Andre! Let us hear how you did it!


I doubt that he will explain since it's been almost a month since the start of this thread.

who says we are in a "bad" market?

Fessup....

Hey Gang! Sorry for not adding the details in a timley manner. Biz is great!

Pretty much there was an REO on the market 200k and the comps were ranging from 250k to 290k. I offered the bank 160k, and they accepted the deal. Closed it in 7 days CASH, and begain the renovation. Complete redo! to include granite, ss, HRDW, and more. I had the property back on the market in 3 weeks, and had an offer in 2 weeks. Closed the deal at 296k minus realtor fees and 6% closing cost in 30 days. Netting roughly 64k.

This is a great market to Flip homes the legal way and make alot of money. That was actually the first one for the year, and I am now currently working on my 8th! If you have any deals that are worth looking at in MD/DC/VA shoot them my way!

Originally posted by Andre Scott:
Hey Gang! Sorry for not adding the details in a timley manner. Biz is great!

Pretty much there was an REO on the market 200k and the comps were ranging from 250k to 290k. I offered the bank 160k, and they accepted the deal. Closed it in 7 days CASH, and begain the renovation. Complete redo! to include granite, ss, HRDW, and more. I had the property back on the market in 3 weeks, and had an offer in 2 weeks. Closed the deal at 296k minus realtor fees and 6% closing cost in 30 days. Netting roughly 64k.

This is a great market to Flip homes the legal way and make alot of money. That was actually the first one for the year, and I am now currently working on my 8th! If you have any deals that are worth looking at in MD/DC/VA shoot them my way!


Thanks for the update Andre we were going to send out a search party to find you lol :mrgreen:

Hi Andre,

Congratulations on a successful flip! In your original post you said you had to wait the 90 days due to the FHA seasoning but in your other post your timeline adds up to only 9 weeks. Did you hold off starting construction for 3 weeks?
I've also run into the problem of seasoning and was wondering what worked best for you.

Good question Larry.

Alright who's going to go find Andre?

No, I started construction ASAP. I just waited for seasoning to clear. There is also a way to work around it, assuming the bank are motivated to move the asset. Check on FHA.gov and you will find a Flip waiver. If you choose to use it, let me know and I will let know the language to put in you contract.

BTW, come find me quick so we can party!

The flip waiver you are refering to is "Waiver of Requirements of 24 CFR 203.37a(b)(2). This is for a lender who has aquired property through a foreclosure and does not pertain to an investor who has purchased the REO. Is this the waiver form you were refering to?

I am running into very messy snags with flipping property and am encouraged that you say you are having good luck with them. I was wondering about a few things to see if your info can help me:
Did your end buyer use an FHA loan?
I am guessing not because you said you closed in 30 days and FHA underwritting is backed up now almost 60 days.
So if it was a conventional loan, then there was no FHA 90 hold needed, so you were able to enter escrow immediately after rehab, right? Were there lots of high comps to support the ARV?
I would be very interested in the language you used to get by the 90 hold, as myself and everyone I know in my investor's group haven't been able to find a way around the 90 hold. Thank you.

There is no good way around the FHA 90-day seasoning. The "waiver" is only a waiver for banks and other asset managers who have foreclosure inventory -- it's NOT for investors who are looking to flip the property.

If you plan to flip to FHA buyers, expect that you'll have to wait 90 days before you get the property under contract and then another 60 days to get to closing. Some lenders can shorten this time period, but it depends on the specific investors/underwriters they're working with.

If you really need to work around the 90 day seasoning, you can either:

- Work with small, local banks to arrange financing that is similar to FHA, but that is funded in-house and therefore not subject to FHA rules;

- Put together a lease-purchase that will get your buyer into the property prior to 90 days, and then you can close after the seasoning period.

Sorry, but there are no "magic bullets" around the FHA rules...

Good stuff, J Scott! Thank you. I have actually changed the type of property I am purchasing. Instead of rehabbing median price point homes with the end buyer in mind, I am now going for cash flow rentals and selling to cash buyer landlords. That's the only way my small brain could think to get around seasoning!

Originally posted by Andre Scott:
Hey Gang! Sorry for not adding the details in a timley manner. Biz is great!

Pretty much there was an REO on the market 200k and the comps were ranging from 250k to 290k. I offered the bank 160k, and they accepted the deal. Closed it in 7 days CASH, and begain the renovation. Complete redo! to include granite, ss, HRDW, and more. I had the property back on the market in 3 weeks, and had an offer in 2 weeks. Closed the deal at 296k minus realtor fees and 6% closing cost in 30 days. Netting roughly 64k.

This is a great market to Flip homes the legal way and make alot of money. That was actually the first one for the year, and I am now currently working on my 8th! If you have any deals that are worth looking at in MD/DC/VA shoot them my way!


Congratulations Andre! Keep up the good work. :D

Your right! The flip waiver is for abnk and AM's, but if used properly investor can use it. It's all in the language in you contract addendums. All you have to state is the the bank is allowing the LLC to become an "authorized vendor" for the purpose of effectuating a sale of the property. I've even seen cases where the LLC (investor) shares a profit with the note holder, for allowing them to do so. This is america! anything is possible!

Originally posted by Andre Scott:
Your right! The flip waiver is for abnk and AM's, but if used properly investor can use it.


Do you have anything that supports this assertion? Did you actually do it? Can you give more detail about exactly what you did and how it worked?

I've spoken directly to an FHA underwriter about this, and he said there is absolutely no way around this rule if you're not a bank or an asset manager.

But, if there is a way, I'd love to hear about it...

Andre, I just looked up the 24 CFR 20337a;
http://www.hud.gov/offices/hsg/sfh/ins/waivflip07.pdf
It states only to be used in states with disasters, like Katrina or Louisiana. Can this be used in ANY state, MN? Also, do you have an actually copy of the waiver? It would sure help if you did.
Also, my biggest concern, the PAYOUT? If I flip the same day via a double closing, will any FHA lender pay out a 30-40k spread as a facilitation fee?
Thank you.
cj

Great job I am getting back into action in Md also. Sounds like you have a fix for the 90 day rule i would like to know more about.

The only way to get your end buyer financed is to make the end buyer's underwriter happy.

Anything under 90 days title seasoning is not going to make ANY FHA underwriter happy.

Even if you have 90 days, in some areas they may require 2 appraisals, and make you jump through crazy hoops just because the seasoning is less than 180 days.

If ANYONE gets an underwriter to overlook the 90 days seasoning rule, they have influenced an underwriter to do something that may cost them their job.

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