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.