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I have seen rental instructions being imposed on some REO properties.
Mostly it's the HOA wanting to maintain a certain percentage of owner vs renters.
Fannie Mae also prefer to sell to owner occupants vs investors versus their Homepath programs.
I have one property under contract now that Fannie Mae wants to put in a 3 month deed restriction to prevent me from reselling the property for more than 120% of the sale price.
Understandable.
However I am looking at another property where the bank wants to impose a $10000 penalty for a buyer if the buyer rents the property for the first 12 months. The agent told me the bank does not want investors, period. I am puzzled by this. Why would a regular bank care who it's sold to? Fannie Mae or Freddic Mac yeah, but a conventional bank?
I recall many new home developers years ago put deed restrictions too, Couldn't sell the new home or rent it out for a year. They too did not want investors, why, what do they care as long as it sells and why regulate/control someone else's property when they are no longer the owner, yet they did and yet we still have a big problem in the real estate market.
Hell, 3 months is great, it will probably take that long to sell it.
Keep in mind that when selling, FHA puts a restriction on the buyers, they cant buy a property that has changed hands within the last 90 days (3 months).
One reason for the developers is the perception - or reality - that renters do not take care of the property and that makes the neighborhood decline in value. This can also affect banks who hold other mortgages in the area.
The banks typically offer a period of time (7-15 days) that only owner occupied buyers can make an offer (this is a public service PR thing). To make an offer in this time period, you have to sign a certificate of occupancy. If you sign that certificate, buy the house, then rent it out, you could be fined $10,000.
If the home makes it past the owner occupied time frame, you are allowed to buy as an investor. However, you do need to investigate the HOA to see if it's OK to rent, and if the HOA is qualified for you to get a loan if you don't have cash.
...Keep in mind that when selling, FHA puts a restriction on the buyers, they cant buy a property that has changed hands within the last 90 days (3 months).
While the press release says it was a temporary waiver, it has been extended through 2012.
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