Flipping
What could possibly go wrong?
I ran across this situation only once. The under writer insisted the property was being flipped and wanted to delay the closing until the 90 day rule was satisfied. That is a rule enacted by the government requiring the seller to own the property for a minimum of 90 days before reselling it. That law was enforce at the time.
Two strange details to look at here. Number one is the under writer. The under writer seems to be like the wizard of Oz. Someone you know is there controlling the ultimate out come, but you never see. From my observation the under writer reviews the entire file for the lender, makes certain everything is in order, and determines the risks involved with the particular Buyer and loan.
In this case there was no problem with the Buyer, rather the Seller owned the property for a short time. Certain foreclosure properties are purchased with an agreement not to resell for 90 days. Other laws and rules apply depending on the property. There are a number of common sense guidelines to follow when buying properties and reselling them. Laws in this area seem to be in a continual state of flux. Some items are added, others may have a temporary forbearance granted.
When dealing with investment properties there are general guidelines to consistently follow. The main theme is keep proper records including receipts. Also take before and after pictures. If you plan on making a living from rehabbing and selling properties get in the habit of filing each property on your computer under the address or file name associated with the property. Follow the general rule, be prepared for everything and no one will ask a question. Pictures may come in handy when it comes time to resell, and if the IRS decides to question the profit margin. Always be prepared for the unexpected. I call that the anti- Murphy plan. When you are prepared, the question never comes up.
