Monday, February 22, 2010

FHA Guidelines Modified

As you may or may not be aware, there is an FHA guideline that requires the seller of the property to have been in title for 90 days before the buyer of that property can even write a contract to purchase the property. This is important when you are trying to do a retail flip. Most of the purchasers that we encounter in Baltimore City are using FHA underwritten loans - many of whom are trying to take advantage of the first time homebuyer $8K tax credit (more about this later...).

As an investor trying to do a retail flip, this means that you need to factor in at least 120 days of carrying costs (90 days before you can write the contract, 30 more days to settle) into your numbers.


The FHA has decided to grant a 12-month waiver of the seasoning requirement effective Feb 1, 2010. This means that you can go into title, renovate the property, and sign a contract with an FHA buyer as soon as you want. Great news.


There's a catch. In cases that the sales price is 20% above the seller's acquisition cost (for investors, ALWAYS), 1) the seller has to justify the increase in purchase price by spelling out the work performed since seller went into title, and 2) the lender has to have its own home inspection and may require the seller to make repairs.

So - some annoying hoops to jump through, but good news for investors nonetheless.

To see the FHA waiver memorializing these changes, check out the signed memo at this link.

A quick introduction

Welcome everybody! We're looking forward to keeping you up to date on the latest news and trends in Baltimore City residential real estate investing. We spend the majority of our days roaming around North, South, East and West Baltimore looking at foreclosures, tax liens, renovations in process, networking with buyers, sellers, agents, lenders, non-profits and City agencies. The rest of the time we're behind our computers researching the public record, analyzing MRIS, and making and accepting offers on real estate here in in the City. We do all of this to keep abreast of the latest changes in the marketplace and hope that we move fast enough to take advantage of the good opportunities and hope that we're smart (or better yet, lucky) enough to avoid the bad ones.

We look forward to sharing our insights with you and hope that we are able to help you navigate this sometimes difficult City real estate investment market.

Additionally, check out our pictures in the Hood Rats photo albums, which catalog some of the more colorful things we encounter in our travels around Baltimore City.

Please feel free to submit any specific questions that you have, by the way. The Dominion companies own over 300 rental properties and renovate over 80 houses each year for both renters and first-time homebuyers. In addition, we were able to sell 101 as-is investment properties in 2009. We are self-described Baltimore City real estate junkies - and if we don't know the answer to your question, we'll absolutely find it out.

Thanks. We look forward to talking shop with all of you.