Investors are making a ton of cash on rehabilitating foreclosure homes

By
Mortgage and Lending with Bay to Bay Lending

I am working with so many investors right now who are purchasing foreclosure homes and investing a small amount of money and time into the homes to get them up to par with what is selling.  Often times interior paint, new appliances, flooring, a few light fixtures, some minor remodeling and minimal landscaping will give a perspective buyer the feel of a new home and the investors a huge profit.  Lending guidelines do prevent property values from going up by a certain percentage and if the home does appreciate more than 20% in a 6 month period or by 25% in a 12 month period they may require a second appraisal.  Any buyer looking to buy a home like this needs to speak to their lender and find out what specific "overlays" or lender specific guidelines that may come into play for that specific transaction.  Some things that are important to look at are, what was the date that the investor purchased the foreclosure property. (date on the deed)  Next is what was the purchase price?  Then as a worst case scenario, if the property has appreciated by let's say, 100% in only 4 months and it's because of a major renovation then things such the prior appraisal/pictures would have to be provided to the new lender in addition to invoices and receipts to substantiate the steep increase in value.  It can be said that lenders will be much more precautious this go around than they were during the real estate boom of the early 2000s. 

 

DJ Rondeau

Bay to Bay Lending, L.L.C.

501 South Dakota Ave, Suite 2

Tampa, FL 33606

813-489-5562- Office

813-480-6077- Mobile

813-464-2867- Fax

djrondeau@baytobaylending.com

www.tampafloridamortgagebroker.com

NMLS Originator ID: 218498

Comments (0)