The current Real Estate Market in the Phoenix area has seen a decline in prices as well as an increase in properties being bought by investors from all over the Nation as well out of country investors such as Australia, Middle East, Europe and many Canadian Investors. More often than not, these are cash buys in prices where positive cash flow can easily be obtained. In most cases properties are cleaned up and then put back on the market for resale after they have been leased to a tenant with 1+ year lease term. Lenders and Banks have imposed the 90 day flip rule And while it is not a deal breaker, it is important to know how things work in a quick re-sale situation of a Phoenix Investment Property.

This 90 day flip rule set forth by The Federal Housing Administration has been around for many years to prevent the buy and quick resale of a home within 90 days. Likewise, while there was no rule in place for conventional loans, backed by Fannie Mae and Freddie Mac, many lenders followed suit and did not allow for financing, for the resale of properties within 90 days. In our case we have lenders who would like 30 day seasoning and very few who will lend on a home with less than that.

However, in recent years this rule was lifted by the FHA and allowed for ownership change and immediate resale of a property. Initially, the ruling pertained just to banks that would obtain homes through foreclosure. Basically, banks had no restrictions after taking back a property through Foreclosure and re marketing to home buyers immediately.

However, that is no longer the case, as the resale of properties within 90 days by private sellers and investors is now permissible in many cases with both FHA and conventional loans.

The real key to making sure that the sale is permissible has to do with the difference between sales price or asking price compared to acquisition price of Investment Property. Basically, a property can be re sold much easier if Investor re markets the home with a less than 20% increase in price post acquisition.
However, if a property is re-sold within 90 days with sales price of more than 20% of what the first buyer bought the home for, then documented improvements (aka proof of money being invested to fix or upgrade the home) must be shown and well documented to warrant the new sales price. In addition, there will also often be two appraisals needed in these cases as well. And the lenders will take the lowest of the 2 appraisals as a final contract and purchase price of what they will lend for.
The Arizona Investment Property Market is definitely coming to life although prices are still being driven down by Phoenix Bank Owned Homes flooding the market. The market is good for the investor willing to work hard for a smaller spread than in a solid real estate market. On a side note, home prices have fallen in the first few months of the year at about 4 percent and downward pressure the Arizona Real estate market is projected through 2011…outlining a great opportunity for Phoenix Investors to build a solid Investment Property Portfolio in Arizona.

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