With all of the talk and advertisements about “flipping” homes on the radio, late night infomercial’s and in the media, it is important to know that while flipping a home can be a profitable endeavor for the seller and buyer’s can like the turn key aspects of appropriately flipped homes, there can be numerous obstacles in obtaining the financing on a “flipped” home. The properties considered flips will vary from lender to lender, some require a seller to own a home for a year, some require 6 months, but most lenders that follow Fannie Mae and Freddie Mac guidelines consider a “flip” property one being owned for less than 90 days when placed into new contract to be resold.
While financing is available on these transactions on all major loan types (Conventional/FHA/VA), some lenders may not allow it and some lenders may allow it with additional requirements based on the loan type and how long the home has been owned since being resold.
It was not until 2010 that you could even obtain FHA financing on property flips, and to this day FHA financing may have the most additional requirements on homes being resold in less than 90 days. Every investor will look at these transactions differently and it is important to be prepared and knowledgeable about what may or may not be required when looking to obtain financing on one of these homes. Will a second appraisal be required? Will a home inspections be required? Will invoices for upgrades on the home being resold to justify the increase from what was previously paid be required? Is the seller a non-profit or the foreclosing lender? These questions and many more are what the lender should be aware of and prepared for as the answer to all of them may lead to different circumstances that you as the buyer/seller may need to be prepared for.
As a specialist in financing on “flipped” properties and with a vast amount of knowledge and experience on what to do with each respective loan program to avoid delays in the financing, I would be happy to help and discuss this further with all of your tentative buyers looking at one of these home’s or with you as the agent representing a client selling one of these homes.