JVM Lending always gives me great ideas to comment on for real estate. One of their recent blogs featured two reminders. These struck me as very important to write about if you are thinking about selling or buying a home. Here they are, verbatim:
Seller Rent Backs: Sellers can rent back a property for 59 days after purchase. Rent Backs are limited to 59 days because the owner-occupant-buyers are required to take possession within 60 days of close, or the property will not be considered “owner occupied” (and thus subject to inferior investment property financing rules).
In our current housing market with a shortage of homes for sale, this helps a seller put their house on the market, get an offer, and then find a place to buy. Most sellers need to sell and have the money in hand before they can buy the next home
Max Number of Financed Properties: Some jumbo lenders allow borrowers to have no more than FOUR financed properties. Fannie Mae limits the number to TEN if a buyer is purchasing a second home or an investment property. Fannie and some jumbo lenders allow for an unlimited number of financed properties if a buyer is purchasing an owner-occupied primary residence.
This is really a reminder for investors. It is always best to leverage a home with a loan versus paying cash, even if you plan on flipping it. Many investors pay cash for homes they will flip within a few months with hard money loans, which have a very high interest rate because of the above rule. And oftentimes the houses they are purchasing would not qualify for a regular loan. However, if you just own a lot of homes, this is good to know -or, as the title indicates, GTK!
