Friday, December 9, 2016

10 Tips for Investors Dealing with Title Seasoning

Title seasoning is a new concept introduced by many banks that sets a required number of months a property owner must own a property before the bank will loan money to a potential buyer to purchase a property from the seller. This concept came into practice because of a handful of investors that advantage of the system. What they did is bought cheap properties, did a halfway job of fixing them up, and then found uneducated, low income buyers that couldn’t really afford to pay the new price to these properties, and put them into the homes anyway. The investors typically had an appraiser in one pocket and a bank loan officer in the other pocket and more or less paid them off to make the appraisal and the loan process inflated enough to qualify a buyer that could not really afford the property in the first place. The following is a list of 10 tips that’ll help investors in the real estate industry deal with the new title seasoning regulations now enforced by many banks in the country.

Sell the home to retail buyers


For most investors you typically don’t care who buys your flipped property. However with the title seasoning laws you’ll often find it much easier to sell your properties to end of the line retail buyers. These are people that are going to actually live in this house with their family for the long term and don’t intend to quickly turn around sell the property to somebody else for a higher price. When buying it from you, this process takes out the little likelihood that a bank will look at this process as a flip as opposed to a simple sale of house. With this channel, the processes move along faster.


Know which banks will approve without the title seasoning requirement


For every financial institution that has the title seasoning requirement, are always other banks and financial institutions that will not have that requirement. It is important to note the lenders in your area that don’t require title seasoning and keep it so that you know of any use when your buyer calls because their primary bank turned them down because the title seasoning requirement. Remaining calm and informing your buyer will only help to improve the selling process.


Have an appraiser within your reach that knows the title seasoning process


It is also very helpful to have in your associate contacts the list of appraisers that understand what you do as a real estate investor and understand title seasoning. This process this is important because these appraisers know how to properly and legally appraise the properties so that the banks will not question the loan process when you try to flip your home to a potential buyer. You do not what your home appraised illegally to inflate the value of the home, but to know how to appraiser it correctly so that the proper pricing to be set for sale and also have enough equity available at the sell price to make sure the buyer qualifies for the loan.


FHA and VA loans


The Federal home administration and Veterans administration loan programs only require 90 day title seasoning requirement. Therefore if you found a buyer that is going to purchase your home and they’re using one of these programs it is recommended that you wait the 90 days for the title seasoning to take place then to sell the home to the buyer for a future profit. As an investor I believe a 90 day wait is often worth a 50 to 60,000 dollar profit.


Renting the property first


If you find a buyer that really wants to purchase your home and is a patient buyer and you’re a patient seller assuming that your markup for profit is also high enough to contend that the wait; it is recommended that you offer to rent the home to the home buyer for 13 months. You can use a portion of the rental fee collected over the 13 months to use as the buyers down payment towards the house and also keep the rest that as profit in your pocket after the thirteen months are complete, you’ll have succeeded the title seasoning time frame. As the seller of the property and then you could legally turn around and use any bank in the world to get a loan for the buyer to buy your home, a guaranteed sell.


Mortgage the property yourself


If you are already a successful real estate investor you’re probably able to purchase the homes that you buy in cash at this point. The mortgage business of a highly profitable game to play if you can afford to get into it and easiest way for a already profitable investor to sell their homes quickly to potential buyers. If you offer to mortgage the property to the buyer yourself, there’s no title seasoning requirement. If you’re the one selling your own property and loaning out the money to the buyer yourself and have the buyer make monthly payments to you until its paid off, another method of a guaranteed sell


Assigning your contract to the seller


If you are a contract investor, your best bet after finding a buyer is to sell your contract to the home seller with a note attached to have the escrow from the closing table pay your fee for finding a buyer.


Selling under the Hud programs


Excellent news investors the Hud program does not have a title seasoning program. Therefore if you buy a house fix it up and sell it under the Hud guidelines you have no problems to sell the property and any bank will approve a properly assigned buyer to purchase your property.


Working with the same people


This one is a no brainer people if you’re doing this over and over again as a fulltime business it is always a proper to network with a few people that you can call on again and again to make sure the process is even easier every time is repeated. Use the same appraisers; you need the same bank loan officers, and the same commercial agents. This way everybody knows what’s going on and there are fewer problems to getting the home sold.


Invest in buildup projects


Another thing to consider when investing in real estate is to invest and build up projects. These are planned communities that have been drawn out on paper and are either not yet built or started to be built in which you can purchase these homes at a pre construction price and in turn around sign a contract with buyers that will agree to buy the property a year or so later when their homes are built. You’ve already got the title seasoning done because they waited for the year for the home to get built.


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