Property Flipping in 2012
As I was closing out my 2011 files and getting ready for 2012, I took a quick glance back through the year. This is always a fun time of year for me, I am able to revisit some of the buyers’ files that bring back some great memories, especially of those grateful first time homebuyers.
Something I noticed was the large increase in property flipping. We are seeing more and more local investors coming into the market and making a difference in our communities.
For a first time investor, the first property flip can be a little intimidating when dealing with the lender.
Here is a list of basic rules that will help with your first flip:
• For flips less than 90 days the investor cannot sell for more than a 20% profit AND a Home Inspection will be required AND ordered by the lender . A 2nd appraisal may be required.
• For flips more than 90 days the investor will be required to provide the lender with a list or repairs and/or receipts or cancelled checks to support the increase in price.
Note: if the home is 100% over the price the seller paid a 2nd appraisal is required and this will be charged to the investor since the borrower is not permitted to be charged.
Click HERE for flip tips from the stars of A&E’s Flip This House.
Check out this video from HGTV.com with some great flipping tips!
I hope you found this post helpful. If you would like more information on property flipping, leave me a comment, I’d love to hear from you.
Comments - 2
Thanks for the response. Yes the rules I stated are for FHA borrowers.
By Lori Clark on 6 February 2012
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Lori, I believe your post is not quite accurate. The rules you state are for people getting an FHA loan. No such rules apply to cash purchases or conventional loans or seller financed flips.
Also, FHA allows to sell a property in less than 90 days under certain situations.
One place where you are on the mark is banks are requiring two appraisals on many resales where an investor is involved. But I just sold one and the buyer paid for both appraisals.
By We buy houses guy on 3 February 2012