Posted by Sheik on October 31, 2000 at 11:34:29:
This is serious stuff - it seems like the classic buy/rehab/flip type of deals will soon be out the door (unless, of course, you find an FHA/VA buyer). Tough.
Sheik
I cant flip properties because of seasoning!! - Posted by THS
Posted by THS on October 30, 2000 at 16:06:24:
I was looking for a solution to the problem I encontered today. On May 31, 2000, I bought a house for 65,000. The original lender on the first was owed 75k and the second was owed 15k. I got the first to agree to take 33k for the mortgage, but the second would not discount. I got a loan of 50k to pay of the first and second and the seller agreed to take the rest in a second mortgage.
There was a tenant in the property who had been living there for 2 years. She had good credit with a score of around 630. I had trouble getting her financed because the old owner didnt keep receipts for her rent and she always paid in cash. I was finally able to find a lender and we were supposed to close tommorrow. However, when title came back the lender backed out because I have not owned the property for 12 months. The sales price is $115,000 with 97,000 at closing and me holding a second for 18,000.
My mortgage broker is telling me that ALL lenders now want 12 months seasoning. If this is now the case, it will be impossible for me to do any more flips.
Could any of the experienced flippers let me know how you get around this.
Thank you for your help.
THS
Re: I cant flip properties because of seasoning!! - Posted by SCook85
Posted by SCook85 on October 30, 2000 at 22:56:08:
Well Jim basically summed up what I have been trying to tell people for the last year.
You really only have 2 options. Hold the home and let your buyer lease from you until you get the seasoning under your belt, or list your home and hope that a realtor brings you an FHA or VA buyer (this should be your method if you must cash out).
Steve
Re: I cant flip properties because of seasoning!! - Posted by JPiper
Posted by JPiper on October 30, 2000 at 21:35:17:
I think owner seasoning has become the rule. Unfortunate. My belief is that there is still a few lenders out there who will do these deals. But I think your deal is going to be put under a microscope, and if it passes this scrutiny it may happen on a case by case basis. But understand upfront that you?re bucking a trend now. This issue has been discussed here on the newsgroup for the last couple of years.
My conclusion at this point stemming out of the owner seasoning issue is that retail flipping of the type that your deal represents may be virtually dead. You can still wholesale properties. Or, you can hold the property and season it. OR, for the moment, you can deal with A credit buyers (I?m trying to remember when one of my buyers had A credit).
But if you?re planning to retail flip to buyers with shakey credit, iffy employment, little cash, perhaps less than desireable area, no repairs AND have an owner seasoning issue?..I?d forget it. This buyer can fit the matrix with a lender, but you?re giving them too many things to not like. To the lender these days, owner seasoning has become synonymous with ?fraud?.
My choice is to season the property. It?s the path of least resistance. In your case, owner finance this buyer then refi them next spring. You won?t have the seasoning issue then. You didn?t lose money, you just had to wait a little. Personally, I?d rather lease/option?.I think I can create a more favorable tax scenario.
In cases where you have made repairs (you didn?t say you did here), or where your buyer has some decent cash into the deal (you didn?t say they did here), or where your buyer?s credit is decent (here it looked somewhat shakey with the lender only willing to loan 80-85%), then I still think you can finance on a case by case basis even with an owner seasoning issue. But you?re going to need an aggressive mortgage broker to go to bat for you?.a somewhat rare commodity as well these days.
JPiper
Re: I cant flip properties because of seasoning!! - Posted by Rob FL
Posted by Rob FL on October 30, 2000 at 20:19:46:
Can she get an FHA or VA loan? I am pretty sure those don’t require any kind of seasoning.
Re: I cant flip properties because of seasoning!! - Posted by Irving
Posted by Irving on October 30, 2000 at 19:47:26:
You could also consider this group. They seem to be doing flips and simultaneous closings nationwide.
Re: I cant flip properties because of seasoning!! - Posted by Brian Mac
Posted by Brian Mac on October 30, 2000 at 18:31:12:
Try this. This is suppose to be their forte, but I have no experience with them. Give them a call if they work in your state.
How did you talk down the first?
THS, post this on the financing forum, too. nt - Posted by Stacy (AZ)
Posted by Stacy (AZ) on October 30, 2000 at 16:10:54:
.