Flipping With Investors: FHA Rules and Guidelines
If you work with investors, the Federal Housing Administration's extension of the "quick flip" is good news. The program was due to expire on December 31, but this move by FHA encourages the purchase of foreclosed and distressed properties, repair and remodel, and resale...all within 90 days.
I personally like the affect the small-time investor has had on homes for sale in Tucson. We call it a "beautification project" and if you can be satisfied with consistent, modest gains...this can be an area for you as well. There's just a few rules when selling to a buyer using a FHA loan here in Arizona.
- All transactions must be arm's length - no relationships involved.
- You must have clear, recorded legal title.
- A second appraisal will be necessary if the selling price is 20 percent higher than what the investor paid for it initially. In addition, a separate, independent inspection is required by a professional with no connection to the participants in the transaction. So wait to hear from your loan officer before ordering an inspection yourself. Health and safety for the new owners is always required.