Because we are a property management company we tend to focus mostly on long term investment in income properties. However, we also know that it is key that real estate investors have a diverse portfolio of holdings and that many long term investors also make excellent gains from flipping properties. There is also a progression of your portfolio that you should be implementing where you move on from lower priced properties with lower profit margins to higher value properties with better margins and market value. Each of these situations is going to be benefited by the new rule change for FHA loans. Basically the government is updating the requirements so that almost 60,000 new condo units will be become eligible for FHA loans.
Why this matter for investors…
FHA loans are for those owner-occupants who are entry level since they have very low deposit requirements and other key advantages for those with lower income. So investors cannot use the loans. However, investors can of course sell their properties to buyers who now have the ability to purchase units in buildings where they were previously unable to. In the past the restrictions were such that very few buildings would qualify, but now those restrictions have been eased and it could be a boom for those looking to unload their lower priced condo units.
What can you do to take advantage of this?
You have two options depending on your situation. If you are currently looking to buy and flip then you should look into condominiums that are either already approved or which fit the new requirements and are in the process of being approved. If you already own units in a building that now fits the requirements you should push to have your board begin the process for FHA approval. This should be an easy sell because opening the door for more demand in a condo will almost certainly increase the overall value of each of the units and the condominium as a whole.
For the complete details on the updated rules check out this article from the HUD website…
And if you decided you would rather continue to hold your low end units, or your building does not qualify as always we are happy to help keep your income pouring in smoothly, so call as at 305-517-3900 to find out how we can help manage your investment properties!
We are pledged to the letter and spirit of U.S. policy for the achievement of equal housing opportunity throughout the Nation. See Equal Housing Opportunity Statement for more information.