Investor · Louisville, KY · Member since 2014 · 34 posts · 16 votes
Being new to REI, we found out about FHA seasoning requirements only after we had a property up for sale a few weeks short of 90 days of ownership and under contract with an FHA buyer right away.
We intend to stick with vanilla-flavored starter homes so it is a given that we will find ourselves in the same situation again, and I am curious how to best handle this requirement if a property is ready to go quickly or ahead of schedule. There might be a others, but two options that come to mind are 1) Just sit on the finished property and do not list it until day 90, or 2) List it and specify NO FHA until xx/yy/20zz.
Option 1 drives up holding costs, but Option 2 seems to place a negative element in the listing, so I am very interested in how experienced rehabbers deal with this.
Rental Property Investor · The Woodlands, TX · Member since 2014 · 345 posts · 288 votes
10y
I previously specified in my contract "no FHA until xx/xx/xxxx" I stopped doing that because I found that we are able to work with FHA buyers in certain circumstances. Either we can transition them to a low down conventional program, or if the property doesn't have much interest other than FHA, we will lease a the buyer until we can contract on day 91... Obviously this option comes with it's own set of potential problems... What to do if their financing falls apart, or wasn't solid to begin with? I would recommend a ton of scrutiny on the buyer's financial situation prior to leasing pre sale
Investor · Sarasota, FL · Member since 2008 · 17k+ posts · 17k+ votes
10y
Don't put "No FHA..." in your listing -- it will scare off buyers and agents who don't understand your rationale for doing so...
Simply list the house, and instruct your agent to have a discussion with any selling agents who want to show the it. Have your agent make it clear to the selling agent that an FHA contract can't be signed until xx/xx/xxxx, but that they're welcome to look at the house.
In parallel, find a great mortgage broker who can help any potential FHA buyers to instead move to conventional loans.