Rapid Real Estate Investing Results

This is great news!
While I’m not an attorney, the legal speak in the pdf below tells me that FHA is now going to allow a buyer using FHA financing to purchase it even if the seller has not been on title for a minimum of 90 days.

http://www.hud.gov/offices/hsg/sfh/waivpropflip2010.pdf

The 90 day seasoning rule was instituted to try to keep “Illegal flips” from occuring. I have “illegal” in quotes because it is only illegal if someone is committing fraud by getting an appraiser to appraise the property for MUCH higher than the real value of the property.

This is totally illegal and I’m pretty sure you can be put in jail for that. Again, I’m not an attorney so don’t take my word for that.

However, the way most of these transactions are happening is this. An investor purchases a property either from a bank or from a homeowner in distress at a substantial discount because of the distressed situation.

Banks do NOT want to spend money to fix up foreclosed homes.

Homeowners that are having trouble making house payments do not want to make repairs either. They are struggling just to pay their bills.

Why would they continue to repair a home they are likely going to lose in foreclosure anyway?

So these properties NEED an investor buyer to step in and buy the home and rehab the home back to move-in ready condition.

Well, in these times of tight credit, it’s next to IMPOSSIBLE to get a decent rate on a long term loan for an investor. So, rather than holding the property as a rental, the investor fixes up the home using high interest loans.

The investor then turns around the property and finds an end buyer that wants to live there. Typically, the end buyer still gets a really good deal on now an updated home rather than a distressed property.

Well, when FHA decided to implement the 90 seasoning rule, that eliminated a TON of buyers, especially first time home buyers that typically rely on FHA programs to get in with low down payments.

They don’t typically have extra money to fix up a home.

So, I welcome this change for everyone involved. It is going to speed up the acquisition of these distressed properties because now the investor will have an easier time finding a buyer.

What do you think of this plan?
Leave some feedback below.

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1. Find the County Assessor Webpage (sales records) or go to the Assessor’s office if they do not have their county records online. Some counties have a great auditor/assessor website. Some of the counties even have pictures, maps and prior sales of the properties. Most of the sites do not have a the full history of the property and will only go back a certain number of years. If you need to go back beyond the history that is currently online you will need to actually visit the Assessor’s office. Then you can get one of the office workers to help you out the first time or two that you go in.
2. Lookup the assessor’s website or go into the assessor’s office. You can typically find the “Assessed Value” and it is often a fairly stable percentage of the “Real Market Value.” In fairly stable counties the assessor will typically have an approximate percentage of what the assessed value is vs. the “True Market Value”. In many areas this value is around 75% of the true market value, but I have seen it as little as 10-20% and it will vary from state to state. The county officials should be able to tell you what it is for their state.

3. Go to websites like www.realtor.com, www.Zillow.com, www.domania.com or even local realtor’s WebPages or MLS sites. These websites can be very helpful and give you a great feel for what the local market is doing around the property you are looking at. You can even zoom into the immediate property area and see what other properties in that general area have sold for on some of the sites. This is especially true for www.Zillow.com. Be aware though, I have seen Zillow be way off on some of their numbers.

4. Get references for a good local realtor. A good realtor working in the area you are looking at should have a feel for where prices are at and should be willing to give you some estimates free of charge. You don’t want the new realtor or a realtor that is not based in that area, or at least within a few miles from the area you are looking at. You want a Realtor that is seasoned and knows the area well. Look for a Realtor that is selling a lot of homes or raw land. You don’t want one that just has a lot of listings; you want one that has actually brought buyers to the table. This Realtor will be a VERY good person to have on your team if you will be buying several properties in the area.
Your biggest roadblock to getting going is in your own mind. Get busy looking at some properties and then find a bargain and get moving.

Technorati Tags: Determining Property Values