Flipping Houses is Back- Great Opportunities in the All Areas of the Real Estate Market
Over the course of the last 5 years, access to new home loans has fluctuated quite a bit. When the market first crashed, banks would only write new mortgages for the most qualified buyers with near perfect credit and a long history of solid income. Buyers were also told to make hefty down payments. Even though interest rates were low, it seemed as if no one could get approved. But that’s no longer true.
Coupled with lower interest rates, the federal government has made it easier and easier for banks to approve loans on new mortgages. In 2013, FHA outlined new standards for buyer qualification on government backed loans, and these new requirements are encouraging home ownership—which makes it an excellent time for investors to get back into the “fix-and-flip” business.
In cities like Houston, Texas, the maximum FHA loan amounts are generous amounts, covering property values for real estate all over the city. While the borrowing limits range from county to county/ state to state, in most cities the limit is about $270,000.
This means that as a fix-and-flip investor, you can buy a distressed property, repair and re-sell the property, and know that as long as your asking price in the range of $270k to $300k, you have a huge market of buyers who will be able to qualify for the new loan. For many years, real estate investors were scared that a new buyer wouldn’t be able to secure a loan and there would be no way for that investor to sell off his renovated property. Those days are over.
In 2012, FHA guidelines required a minimum credit score of 530 for all loans. Homebuyers with a credit score below 580 are required to make a 10% down payment. The down payment funds must belong to the borrower. No gift funds are allowed and no seller’s concessions are allowed.
The requirements for more qualified buyers, those with a credit score of 580 and above, allow a borrower with a credit score of 580 to buy a home with only a 3.5% down payment. FHA guidelines also allow a borrower with a minimum credit score of 580 to buy a home using their own funds for a down payment or the down payment funds can be a gift from a family member. FHA guidelines allow a homebuyer with a minimum credit score of 580 up to a 6% seller’s concession. The seller’s concession must be written into the sales contract.
FHA has also suspended it’s 90 day title seasoning requirements on federal-backed loans these past few years, and that suspension is carrying over to 2013. In previous years, banks required that a property owner remain in title (own the house) for a minimum of 90 days to 6 months before he could sell it to a new buyer for a profit. While some banks still have these title seasoning preferences or requirements, as long as you sell your property to an FHA buyer, you don’t have to own your investment property for a minimum amount of time before reselling it.
So if you’re able to renovate that property and find a buyer within days, weeks or a couple of months from the time you purchase it, you can sell it for a profit without worrying about title seasoning requirements. In strong real estate markets like the market in Texas, there are plenty of opportunities and qualified buyers for your investment properties.
To learn more about how to find great investment opportunities, or to get more information about title seasoning, FHA loans and other ways to maximize your fix-and-flip investments, call an agent at Big State Home Buyers in Houston, Texas. Agents can be reached at (713) 263-7466 and you can visit us online at www.BigStateHouseDeals.com to find great investment opportunities. For even more information on how to sell your house fast to an investment company like ours, check out www.BigStateHomeBuyers.com. We look forward to serving you!