I have noticed a lot of visitors come to my blog when searching about the 90 day FHA flip rule, so I thought I’d elaborate a bit more on my recent experiences.
We have closed five or six FHA transactions and have four more in escrow over the last year. All fix and flips.
You cannot receive an offer until the 91st day!
There is a lot of confusion about this among investors, but if you take an offer on your flip, the date on the offer must be the 91st day after title recorded your purchase.
Banks have a lot of flexibility in the rules
The law states, that if the transaction happens from 91-180 days they can request a review appraisal. In all the transactions we have done, this has only ever happened once. Most of the time the underwriter requests that the existing appraisal provide 1 or 2 more current comps depending on the market timing.
A good appraiser can help you, by being creative
In our market right now, we seem to easily have a willing buyer and seller, but struggle to get an appraisal where it needs to be. FHA offers still allow you to pick who will appraise the property. The main one I use can actually use other offers (in a multiple offer situation) in lieu of additional comps. House #12 we had many offers over list price and that helped our appraiser increase the value about $15,000 over what he originally thought it would be.
Underwriters have requested to prove what we did multiple times
The underwriter has asked that we provide backup on the repairs we did. In both cases, I based the purchase price to the sales price with an added value form. I basically said what the remodels we did are worth, not how much we spent. You can be quite liberal with this. For the last one, we had to stretch pretty hard, but I put in about 10 before and after pictures of the property which I think really helped.
FHA Offers take 60+ days to close right now
This is not true in all cases, but it seems like almost all of the FHA transactions we are doing take 60+ days to close escrow. This sucks when you have carrying costs, but you should factor in a longer carrying time into your budget to make up for it.
The market is constantly changing, but this is what I have noticed over the last 6 months.