If you want to start your own house flipping business or you are new to the house flipping industry, you might wonder how soon you can flip a house after purchase. There is not a universal answer to this question as the time taken to flip a house varies from project to project. However, you can have a rough idea about the turnaround time for your house flipping project.
Investors generally rely on the profit they make by selling to buy another property to keep increasing their capital. That is why they want to sell the flipped house as soon as possible. Suppose you bought a home and did all the renovations in a month. Can you put it right on the market? Or does it require you to own it for a certain amount of time?
The answer depends on how you finance it. If you have bought the property with cash, you will have more freedom, and if you use a mortgage to finance your property, there are some general rules that you should know. You should have to wait at least 90 days to sell the house. Each mortgage program has different requirements for flipping the house after purchase.
FHA Buyers – FHA loans have stern requirements when it comes to flipping a house. They are not flexible regarding their loan terms, leaving no wiggle room for negotiation. You will have to be on the title for at least 90 days; otherwise, you won’t be able to sell the home to FHA buyers.
The FHA will allow you to sell the property if you have owned it for 91 to 180 days. They also add more restrictions, such as a second appraisal requirement, which the seller must pay for and not the buyer.
VA Buyers – VA lenders have similar restrictions as FHA lenders regarding the 90-day rule. Sellers cannot sell the home if they have not owned it for at least 90 days. But if they own the property for 90 to 180 days, the lenders may add more requirements.
Most lenders may require a second appraisal to verify the value of the property if you are earning more than 20% profit on the house. Again, the seller will have to pay for the appraisal and not the buyer.
USDA Buyers – USDA loans are designed for those borrowers who buy homes in rural areas as per the USDA guidelines. Sellers can only sell the property to the USDA buyers if the property falls within the specified areas according to USDA guidelines. Just like VA loans, lenders may require a second appraisal to verify the value of the property if you are making more than a 20% profit by selling the property.
Conventional buyers – Conventional lenders have more lenient guidelines compared to others. Fannie Mae and Freddie Mac aren’t that strict about their requirements, leaving most of the things up to the lender. In general, if you own the property for less than 90 days and make more than 20% profit, some lenders may require a second appraisal and some may not approve your loan.
House flipping is a lucrative business, but you need to know the legal ins and outs to avoid any issues.
How soon can you flip a house?
Of course, house flipping is not only a financial investment; you have to invest your time too. The time it takes for the house to flip varies depending on the size and scope of the project. Speed is another factor when it comes to flipping a house. The faster you flip the house, the quicker you will sell and make a huge profit, and the more you will be able to reduce your carrying costs and other expenses.
The time it takes in house flipping largely depends on how soon you can rehab the house and sell it. If everything goes well, it will take a minimum of 6 to 12 weeks to buy and flip the house. If you are using a mortgage to finance your property, you will have to own it for at least 90 days; otherwise, lenders won’t lend on the property. So you do not need to rush into flipping the house, and neither can you flip the house that fast anyway.
Here is the basic turnaround time for house flipping:
- Property purchasing (30-45 days): Depending upon the type of financing you use for buying your property and the nuances of the sales contract, it may take 30 to 45 days to purchase the property. During appraisal settlement and loan closing, you can plan how you will rehab the house and other renovation ideas.
- Rehab the property (1 month to 6 months): The length of time it takes to rehab a property depends on its complexity; whether it requires only minor renovations or full construction. If the property requires only a cosmetic change, it may take 30 days or less. But most of the time, fix and flip properties need more than cosmetic changes. If structural changes are required to rehab the property, you will need permits and contractors for the rehab. In this case, it may take up to 6 months for rehab.
- Property selling (1-3 months): Once you are done with property rehabbing, you have to list it on the market to sell. This takes an unspecified time. Property selling depends upon the market and marketing strategy. Working with a licensed real estate agent helps you sell the property faster than you would do it by yourself. It may take a significant amount of time to close the deal and sell the flipped house.
As you can see, flipping a house may take a minimum of at least 4 months if everything goes according to plan. Otherwise, it may take more time.