Thanks to the Department of Housing and Urban Development's February 1st about turn on its stringent 90-day 'no-flip' rule on foreclosed properties, real estate investors on the look-out for distressed properties priced at below market value are now able to flip a purchase.
Better still, it could well be a win-win for buyers in the market for affordable, newly renovated homes. For first-time and budget buyers tapping into the Federal Housing Administration (FHA) insured financing will now have access to a wider range of homes in hard-hit neighborhoods ripe for a return to better days.
Though real estate experts have concerns that investors flipping distressed properties will look to cash buyers and those using more conventional loans, the year-long program, designed to stabilize home values and improve heavily foreclosed communities does have some strict rules and regulations in place to prevent predatory practices of inflated pricing.
For instance, all real estate transactions in this category are required to be at arm's-length, in that there must be no identity of interest between buyer and seller or any other party involved in the purchase and sale.
Extra documentation to justify a significant price increase is mandatory in circumstances in which the home sales price is 20% or more above the seller's initial purchase cost.
Californians utilizing FHA insured loans must have fully documentable income and demonstrate that they can make the monthly payments on a new mortgage. Most buyers will have to come up with a minimum of 3.5 % in downpayment and the purchase property must be owner occupied.
Thinking of investing in a distressed property to flip within the new 90-day period? In the market in Sonoma County for a recently refurbished starter home? Call Southern Sonoma Country Life's (Sponsor) real estate broker associate Timo Rivetti at 707 477 8397.
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