Investor · Sarasota, FL · Member since 2008 · 17k+ posts · 17k+ votes
17y
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...
Residential Real Estate Broker · Fort Washington, MD · Member since 2008 · 27 posts · 2 votes
17y
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!
Altus, OK · Member since 2008 · 2k+ posts · 690 votes
17y
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:
Real Estate Investor · Dallas, OR · Member since 2009 · 74 posts · 1 vote
17y
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.
Residential Real Estate Broker · Fort Washington, MD · Member since 2008 · 27 posts · 2 votes
17y
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.
Investor · Kern county Riverside County, CA · Member since 2008 · 494 posts · 261 votes
17y
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?
Investor · Kern county Riverside County, CA · Member since 2008 · 494 posts · 261 votes
17y
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.
Investor · Sarasota, FL · Member since 2008 · 17k+ posts · 17k+ votes
17y
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...
Investor · Kern county Riverside County, CA · Member since 2008 · 494 posts · 261 votes
17y
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!
Real Estate Investor · Kahuku, HI · Member since 2009 · 148 posts · 25 votes
17y
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!
Residential Real Estate Broker · Fort Washington, MD · Member since 2008 · 27 posts · 2 votes
17y
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!
Investor · Sarasota, FL · Member since 2008 · 17k+ posts · 17k+ votes
17y
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...
Real Estate Consultant · Mpls, MN · Member since 2009 · 8 posts · 0 votes
17y
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
Real Estate Investor · Tampa Bay, FL · Member since 2009 · 180 posts · 17 votes
17y
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.
Real Estate Investor · Anthem, AZ · Member since 2009 · 9 posts · 2 votes
17y
Can someone answer this question for me since all of you seem to be experienced with this. is this correct, FHA will not let you buy the home as an owner occupant until 180 days? I am also understanding that some conventional loans are requiring the same type of seasoning? Is this true? We are trying to get into our first flip but we cannot hold on to the property that long! Obviously in this market, buying a home and having it remodeled to flip and putting it back on the market is the way to go, especially if you are dealing with a first time home buyer. The want to move into something brand new, not something they have to fix up themselves because they do not have the out-of-pocket cash!