Do I need to wait 15 days to purchase an investment property?
Yes and No. First let me explain what an investment property is:
What is the definition of ‘investment property’?
An investment property is a home you buy that is not your primary residence, that you don’t intend of living in within 60 days or purchase and live in for at least 1 year. Some investors get around that by living in the property while they fix it up, then sell it a year later, but most investors choose not to do this, because they would rather flip multiple homes within a year instead of holding a single one.
So what type of properties have a day restriction for investors?
It depends on who is selling the property. If you are looking at a Freddie Mac / Fannie Mae property, they have an initiative called the ‘First look initiative’ which prohibits investors buying within the first 15 days. Whether or not you think this is ‘fair’, it allows actually home owners the first chance to purchase a home instead of investors buying them and charging a premium later. It usually doesn’t interfere with investor houses, because the houses that stay on the market longer than 15 days are houses that need extensive repairs, upwards of $20,000-60,000.
Some banks allow a ‘grace period’ for home owners to buy first, but each bank is different. Consult your real estate agent whether the house is under any constraints for investors or not.
What about HUD houses?
HUD houses (housing of urban development) are houses that used FHA loans that were foreclosed on. Once HUD puts them up for sale, investors can’t make an offer until the 11th day, but the initial owner occupant period can be shorter or longer, depending on what the asset manager (listing agent) chooses to do.
HUD offers great incentives to buy their houses, from $100 down payments to 50% off the price! I will discuss those incentives in the next blog post!