All Forum Posts by: Randy Bearden

We had 3 different LLCs in 2012. One had no transactions other than opening a bank account. I ask my CPA the same question you just posed. The account said IRS looks for a return for each EIN. She went on to say there was a $195 penalty incurred each month if no return filed.

You might want to ask your account this question and see what they say.

If you and the buyer signed your contract to purchase and sale prior to February 13 you were within the 90 day seasoning period required for FHA insured loans. Here is a link to a very good article by @Brandon Turner that explains the requirements that must be met for a sale to take place within 90 days.

http://www.biggerpockets.com/renewsblog/2012/12/05/fha-suspends-anti-flip-2014/

This is not an unreasonable request from the lender, especially since your selling price is over 20% of you purchase price. Some lenders will ask for this, some will require a second appraisal. I have gotten to the point to where I comply this list during the rehab process because i'm pretty sure I will be asked for it. You should have no worries, as long as the appraisal comes back at purchase price.

Thank you guys for your input. I just wanted to update you on my situation.

After reading the link Jon Holdman sent me I made up my mind I was not inviting an inspector into my property. I know Jon must be happy just to have that nightmare over with. I called a contact at Academy Mortgage that J Scott shared with me about a month ago. She said she had never heard of such a request from a lender. She also said she would be happy to take my buyer as a client if need be.

I talked with the buyer's loan officer Monday afternoon and explained I would not pull permits on the property. He said we could reduce the selling price $7,000.00 to account for the square footage discrepancy. I told him that wasn't happening. He said he could not get the deal complete if I didn't agree to one or the other. I explained at this point I would consider this deal over and I would either put the property back on the market or recommend another lender to my buyer. He said he would inform his people of my decision.

Less than an hour later the loan officer called me back and said he had talked with his managers and they were discussing if they could bypass the issues with the permits. He would call me Tuesday to let me know the outcome.

The loan officer called me today (Tuesday) and said they were going to go ahead and get this loan done. We are set to close a week from Thursday.

Again, I truly appreciate each of you sharing your experience and information with me. It certainly help in my decisions and negotiations with this deal.

Randy

Like Jon Holdman said, you want to get a pro-rated policy for a fix and flip. I have a local agent that will search several companies for the best rates. Drew Konop your in the ballpark of what we are paying. If you PM me I can give you a suggestion for the pro-rated policy.

I would also be interested. Doesn't matter on topic.

Jon....Thanks for the information and for sharing your experience. I have always enjoyed reading your responses in the forums. They are usually right to the point and very candid. I like that. Thanks.

I purchased an REO property in Paulding County GA that had a finished basement. The bath in the basement was done when house was built. The rest was finished afterwards. I completed rehab on entire house. In the basement I replaced carpet and ceiling tiles and painted. Shortly after rehab was completed we got it under contract for $500 over asking price. Buyer is getting an FHA loan. Appraisal came back fine. Just a few days left until closing. Buyer's loan officer called me yesterday and said the appraiser shows more finished square footage than county records due to the finished basement. I explained basement was finished prior to me getting the property. He called me back today and said I need to pull permits and have basement inspected before he can go through with loan.

Now for my questions and concerns:
1. Has anybody else run in to this issue?
2. How big of a can of worms would I be opening if I decide to pull permits?
3. Will inspectors require me to open sheetrock, etc.?
4. If I decide to walk away, could this rear it's ugly head with another buyer using FHA?

I have never ran into this situation with other properties like this one. My RE agent has never ran into this situation and even the buyer's loan officer said he had not heard of this before.

Any advice or answers would be greatly appreciated.

I know you see this as a set back but this actually could have turned out a lot worse. The bad part is, they said they lost their jobs. The good parts are, they immediately moved out, they notified you they were out and they left the property in good condition.

You will spend more time and money pursuing legal action than it's worth. Time to dust yourself off, get back on your horse and get another tenant in there.

Lesson learned, don't accepted partial deposits or rents. Something else I would like to share. If the occassion ever arises, never rent to friends or family. I learned this one the hard way.

I would think you could get a decent rehab property for 35K. IMO run the other way...fast.

We have used the prefab cabinets from Home Depot on a couple of properties where all cabinets had to be replaced. We are very satisfied with them. Save the money.