The credit was scheduled to end on December 1, 2009, but President Obama signed an extension making the credit available through June 2010. But there’s one condition! The buyer must sign a contract by April 30, 2010 and the property must close by June 30, 2010. The president also raised the income limits: single buyers can now earn up to $125,000, and still get the full benefit while married couples can earn up to $225,000!

Previously buyers were required to be a “first time buyer” (meaning a buyer who has not owned a home in the past 3 years), but now people who want to trade up and purchase a more expensive house can also qualify. However, they are required to have owned and lived in a house for 3 of the last 5 years, they can only claim $6,500 if they close by June 30.

When our investment houses are purchased to rehab and sell, the investor often sells the house to a buyer who qualifies as a first time homeowner. Most of these houses are bought at a wholesale price of $60-80K and sold in the retail $130-155K price range. The $130-155K price range is a price point that brings a lot of first time homeowners, so make sure you understand the tax advantages!

Include the tax credit in your marketing! You will likely sell your house faster, and you will help a first time homeowner not only take ownership of a house, but save some money doing it!

This rule only applies to foreclosed homes, and is only in effect for ONE year. For details go to http://portal.hud.gov/portal/page/portal/HUD/press/press_releases_media_advisories/2010/HUDNo.10-011.

Being on the inside of Tampa’s investment market, I want to add my opinion of what a large impact this rule actually has on our investment opportunities. Over the past 11 years, I’ve seen the physical condition of available investments change dramatically as the market changes. Think about it. In 2004, demand for investment houses was very high, so prices were rising and buyers/investors HAD to be less picky about the physical condition of the houses. Investors were buying anything they could get their hands on. Whether the house needed $5K in repairs or $50K! In the position of today’s market, we are flooded with available investments – mostly foreclosures, so we are able to be picky and select houses that need less work. This means our investors will spend LESS TIME fixing up the house! Now with FHA lifting their seasoning requirements, our investors have a great opportunity to buy/fix/sell multiple properties in 2010!

Another important detail is that most of these foreclosures were purchased in the past 5 years. When the previous transaction took place, the buyer (who was eventually foreclosed on) used conventional financing. The conventional lenders (i.e. Washington Mutual, Bank of America, Countrywide) all required appraisals done on the house before they issued the mortgage. The appraisers did an inspection of the main elements of the house including the plumbing, roof, A/C and electrical. And although the inspections were not as thorough as something done by a licensed contractor, you know that the basic elements of the house were in good condition within the past few years – thus increasing your ROI.
Now is a great time to take the leap, buy your first investment property, and sell it quickly using FHA Financing!

We spend the majority of the day debating this question: How much cheaper will Tampa investment properties get? Selling 20 houses a month gives us a good perspective on the local Tampa investment market. In my 11 years in the real estate market, I haven’t seen prices this low. Another factor to look at is the fact that you can now buy a house cheaper than you could build it!

Throughout 2009 we saw the demand for investment properties slowly and steadily rise. It didn’t affect the prices much, but consumer confidence seems to be increasing and more and more people are turning from the stock market and buying rental properties as a safer alternative.
It was probably late 2006 or 2007 since we had people rushing to buy a house, or even offering more than our asking price because there were several people wanting to buy the same house, but it also happened in 2009! We have seen a lot of people who were new to real estate investing buy their first rental in 2009. A lot of these buyers have the same opinion when they see one of our Project Analysis: “That’s too good to be true!” And they are right! A three bedroom, concrete block house for only $29K?!? It is too good to be true, but the good news is – that’s where our market sits right now! These houses are located in neighborhoods that have a lot of absentee owners (people that own the house and rent it out), and are in neighborhoods that had the worst inflated appraisal numbers over the past 6 years. That same house would have sold for $89K+ in 2005, so people are skeptical seeing that same house at $29K! My answer to that question comes from a great quote by Warren Buffet: “Get fearful when everyone else is greedy, and get greedy when everyone else is fearful”. The people who are buying these $29K houses from us are setting themselves up for a great cash flow position.
Let’s put this into perspective. Say the house rents out for $800/mo (back in 2005 it would have rented for $950+). Excluding taxes and insurance, the investor will recoup his or her initial investment in a little over 3 years! Speaking of taxes, it is important to know that the property appraisers base your tax bill on the previous year’s sales. As people are looking at an investment, they may be turned off by real estate taxes that seem unreasonably high. Understand that as the property assessors run out of inflated sales prices to use, they have no choice but to lower your taxes! We saw some great drops in real estate tax bills in 2009 and expect the same trend in 2010.
I believe that people buying rental properties for under $60K are setting themselves up for success over the next 5+ years. Either they’re going find themselves in a great cash flow situation or they will be selling the houses for much higher prices (more similar to the cost of construction). This is the best time to buy Tampa investment properties. Prices are at an all time low and the return is only going to put money in your bank.