property-flipping_400"What does this mean?".  Normally HUD will not allow an FHA insured loan on a property that has been bought by an investor, fixed up and sold within 90 days. During the time of boom to bust there were some unscrupulous investors that would buy properties and turn them immediately, sometimes with a straw buyer at hyper inflated prices.

 What we are seeing now is a void being filled by the investors who have the money to buy properties that have been abandoned for months, fixing them up and putting in a qualified buyer who has a nominal down payment and who would not have otherwise had the money to fix up such a property. Thus taking these eye sores off of the market and helping the values of the neighborhoods they are located in.

"Property flipping is not for the faint of heart".  Most of the time when investors purchase these properties at the court house steps they come with no title insurance, could have IRS liens on them or a huge lien for non payment of association fees. These investors typically work 7 days a week chasing properties that will be coming on the market and then competing with 5 to 8 other investors bidding against them. Even these experienced investors will occasionally get burned, the margins are not what they used to be.

One other way HUD is protecting themselves is by requiring home inspections and multiple appraisals on these properties that are being flipped.

Posted by David Hughes on


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I purchased a condo in Westland, Michigan with closing back in October,2010. Is it to soon to put it up for sale? I'm not comfortable, I just want to move. Does the NO FLIP RULE pertain to me?

Posted by Jeanette Lattner on Wednesday, May 11th, 2011 at 9:27am

Jeanette, it does not apply to you, sounds like you bought the home as an owner occupied property. In that case you can do whatever you like with the property, people change their minds, get transferred etc.., what we are talking about on my blog is investors who buy these properties and flip them.

Posted by David Hughes on Wednesday, May 11th, 2011 at 12:44pm

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