I have a property under contract currently for 245k with an ARV of 360k. I’ve found an HML who will lend the money even tho the 65% doesnt necessarily work out.
I am somewhat confused on the ‘seasoning’ thing. This is my first true flip, and only a few wholesales under my belt, and I’ve read about seasoning but idk what it is exactly.
I hear that as of Feb 1st there will be no seasoning anymore for 12 months but I still do not know exactly how it works anyway. Obviously I will have to push the signing back til after the first. My understanding is this:
I close using my HML’s money and now that the property would be in my name, I assign contractors to rehab, then turn around and resell it? Obviously pay my HML off but is it truly this simple? There has to be something I’m missing here but I simply can’t figure any hitches out on my own other than the seasoning thing.
Hi Christopher, the “no seasoning” rule that just came out is for FHA loans. I know that there are several people on this forum that are having their attorneys review this to make sure that this new rule applies to investors as well.
If you do decide to purchase the property just make sure that your end buyer is working with a mortgage company that does not have any seasoning issues. It’s best to talk to the underwriter and tell them what you are doing and ask if they will be able to fund the loan.
Just make sure you are taking into account all of your fees before getting into this deal i.e. the cost of hard money, holding cost, repairs, closing costs on both transactions, realtor fees…
When I was wholesaling I always used the formula ARV x .65 -repair cost = my offer
Best of luck!
Michelle
It’s probably cheaper to use a flash funder then a HML. This will cover the A - B part. Purchase the property under an LLC or Land Trust then double close the B - C. Herbster