Did you know that FHA now allows flipping? Put simply, an FHA flip transaction is when a property is re-sold within 90 days of acquisition.
It's true! They've waived the no flipping regulation 24 CFR 203.
37.
(b)(2)! Due to the high foreclosures / REO (real estate owned) and distressed properties on the market, FHA finally sees the need to help stimulate real estate sales across the US of A.
This is great news to both investors and first-time home buyers alike.
Mortgage rates and property values are at a sweet spot allowing distressed or abandoned properties to truly be affordable.
The affordability factor of REO or distressed properties makes these types of transactions more feasible, because most of these properties will require renovation and rehabilitation.
To give you a better perspective of the real estate opportunities within Miami, I did a little research, and it's clearly a buyer's market out there.
According to the January 2011 figures of Miami-Dade County Economic Indicators, the median sales price for a single family home for December 2010 was $173,600.
Miami-Dade County Clerk of Courts reported there were over 34,000 foreclosure filings for in 2010 alone.
Finally, as of today, trulia.
com reports over 8,500 single family residences for sale.
These stats, along with historically low interest rates, point to a unique opportunity for those looking to buy.
Think you can't get into the flipping game because of less than stellar credit, or limited funds for a down payment? FHA just might fit your bill.
They have less stringent requirements in order to help homebuyers get the financing they need.
If you want to play in the flipping game here are some of the rules that must follow in order to meet Housing Urban Development (HUD) requirements: 1.
The mortgagee must justify and document any sales price that exceeds the seller's acquisition costs by 20% or more 2.
All transactions must be arms-length, with no identity interest between the buyer or the seller 3.
Seller holds title to the property 4.
Limited liability companies or corporations were established and are operating within the applicable state and federal laws 5.
No pattern of previous flipping activity exists on the subject property as evidenced by multiple title transfers within the previous 12 months (chain of title can be found on the appraisal report) 6.
Property must be marketed on openly and fairly through a multiple listings service, for sale by owner; no assignment of contract of sale could constitute a red flag Some of the above rules do not sound too bad, just play fair ball and stay away from the funny stuff and you'll be fine.
Worst case, if you are an investor looking to flip a distressed property and find a buyer who is a first time home buyer, just keep all of the records showing the renovation / rehab work completed to the subject property to justify the work completed if your asking price is greater than 20% above purchase price.
And here's the best part! Through an FHA 203K program, you can buy that distressed property that you have had your eye on, renovate it at minimal out of pocket costs, and flip it, hopefully at a pretty profit.
Your flip will sell because you'll be able to make it look great and also market it as an energy efficient, green home.
Real estate profits in your pocket + Revitalizing part of a neighborhood + Reduced carbon footprint = Winning!!!