The FHA and USDA Anti-Flip Rule

[Michael Ablan]

Hey guys!

I just wanted to write a quick post about the FHA/USDA flip rule. Somehow I had never heard of this before and kind of stumbled on the info while talking to my lender how some of the flips I'm doing (thank god I did too).

• The flip rule prevents flippers from selling their projects for a profit for the first 90 days, beginning from the day the deed is recorded.  
• After the 90 days are up, the flipper can now sell to an FHA/USDA buyer, but if the flipper sells it for DOUBLE of what they paid, then the flipper will have to pay for a 2nd appraisal to go along with the first appraisal that the buyer typically pays for.  
• If the sale price is less than double, then this condition isn't required.  
• Once the original purchase date reaches a 180 maturity, then none of this matters and the flipper can go ahead and make the sale as normal.

This was important to me because I was in the process of setting up a flip/sale in a 45 day window. I wasn't aware that I'd be obligated to hold it for 90 days if my buyer was using FHA (that's what almost everyone uses in my area). Now that I know this, my strategy moving forward has adjusted drastically.

From what I understand this rule is enforced on conventional loans depending on the bank and LTV. I was also told that this does NOT affect VA loans. Can anyone else confirm this?

Hopefully this info will be useful to someone else.

[Sergey Sidelnikov]

Mike, my partner and I flipped properties to FHA buyers. Your statements about 90 days, double appraisal if the selling price is double or more than purchase price and 180 from the day of closing are correct. You can find this with any lender who works with FHA.