Comments on: FHA Property Flipping Rule Update

By: Paul Barrow

Paul Barrow — Tue, 12 Jan 2010 00:28:13 +0000

Thanks for the input Stacie. I have had some success using option contracts as well, but only with certain sellers (obviously not banks or asset managers). Some investors are also using "reverse assignments" to adapt to new rules. We have found the best strategy for the most common flip scenarios is to use approved real estate contracts and fund Side A closing with transactional funding. Happy investing.

By: Stacie Vanleeuwen

Stacie Vanleeuwen — Mon, 11 Jan 2010 17:33:07 +0000

Seasoning issues can easily be overcome by using an Option Contract, Co-created by Jeff Walker, a practicing attorney in Ohio as well as a real estate investor. My company has used this contract for back to back closings, without an issue.

By: Paul Barrow

Paul Barrow — Wed, 06 Jan 2010 18:33:49 +0000

Caron – I don’t think it would be considered fraudulent to have a contract during the seasoning period to make both parties feel comfortable being “locked,” and then canceling that contract for a new one on day 91. The point of the first contract is to get started with all due diligence other than the loan (inspection, insurance, title, etc). By the time the second contract is executed these contingencies should all be finalized. It’s not a perfect scenario, but the best we can do for clients under the current rules.

By: Caron McGinley

Caron McGinley — Fri, 01 Jan 2010 18:23:29 +0000

I have just run into this situation for the first time. I am looking for a viable solution and yet am very concerned about the suggestion of writing a contract, not submitting to lender, and then replacing the contract – isn’t that fraudulent?

Our buyers are considering doing a lease option with specific purchase terms and a non-refundable deposit (after getting pre-approved and completing inspections). We are still concerned about the appraisals 90 days from now in our declining market.

Thank you for starting this conversation!