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.
NO MORE!
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.
BUT WAIT - NOT SO FAST!
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.
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