Any chance you could show us those pictures somehow. I’d sure like to see what your $85k house looked like before and after. I picture is worth a thousand words or thousands of dollars in your case.
Lenders are becoming more and more careful, but most are still lending on rehabs.
It’s important that you do a couple things, though. Take photos before you start the work to document the condition that justified the low price. Then, take contrasting photos at the end so that your improvements are very evident.
Second, prepare a detailed scope of work for your contractors. This will be further documentation of all you’ve done.
Finally, be sure get paid invoices for all the work that is done.
I haven’t had a problem with lenders questioning the profit I’m making…they want to see clear documentation of the improvements you’ve done to warrant the dramatic increase in price.
I just had an FHA loan approved for a house that I did a complete rehab on. I paid $10k and the contract is for $85k. I had done the things I described above (and was asked for the scope of work and receipts, but not the photos).
Your buyer will not be able to get FHA financing if they sign a contract less than 90 days after you bought the house. If you plan on your buyer going FHA, the contract must be dated at least 91 days after you settled on it.
FHA requires two appraisals for houses owned 91-180 days. This shouldn’t be a problem if the house is priced fairly and your repairs are evident.