New Flipping Laws In Michigan?
I told my realtor that I was interested in wholesale flipping. He stated that it is more difficult due to new Michigan laws. Does anyone know what these laws are that he is talking about? I haven't met with him yet to discuss but I would like to have a little knowledge about it before I go and talk to him. Any help is appreciated!!! 
Anyone out there from MIchigan that would know this?
Not sure about the laws he/she is talking about. I know of a few people that wholesale here in Michigan. Ask your Realtor what exact laws he/she is referring to. If he/she can't state them then chances are he/she doesn't know what they are talking about.
There are some good realtors out there but most of them are pretty worthless. If your worried then talk with a real estate attorney.
Some advice. Surround yourself with people that are trying to accomplish the same things as you. This will help you stay on track and motivate you when things don't go your way.
Tom
Thanks for your input. I'm not sure if he's just talking about seasoning? But I'm meeting with him next week and I guess will find out then. If others are wholesale flipping in Michigan, I guess I'll be able to also. Thanks
I haven't heard of this legislation either.
He probably doesn't know what he is talking about or he is referring to seasoning which can be circumvented. Things are alway difficult if you don't know what your doing. If it was easy, them everyone would be doing it, everyone would be rich, and there wouldn't be any distressed properties to flip. I just flipped a property 2 weeks ago for $4,000. I put about 4 hours into it getting it under contract and sold and another 1/2 hour driving to title company picking up my check and walking across the street to cash it. Ask me how difficult that was!
As an old lawyer who remembers when "they" used paper, I can give you a suggestion that's cheap (free) and easy to use when researching a thing like this:
Go up to the courthouse, find the law libary there, then find the MI Statutes, then find the Real Property Statutes, and check to see what new statutes MI has enacted most recently.
In the back of any statute volume, there's a pocket on the inside of the back cover, and that's the first place to look...for the "pocket part" that will show any recent new laws. If a volume has nothing in its pocket, it may be because it's a NEW volume and it will contain all the legislation, including.
I"ll bet I could go to any courthouse in the USA and be able to tell you within an hour what recent RE legislation has been enacted in that state. And if I can do it, so can anybody else who can read English.
Thanks for all the info. I'll let you know what I find out if it's anything interesting. Also, where does everyone find their wholesale deals? Realtors? Their own marketing?
As perhaps the biggest wholesaler in Detroit (ok enough with the self promotion I promise) let me add my insight. Your realtor may be either really smart or not so smart. They could be being greedy or may be politely blowing you off. If you buy low, his/her commission is low. Therefore they may be discouraging you from buying cheap houses. As for the smart part, I will tell you this, it is getting harder to finance wholesale houses and pull cash out up front. That is not legislature, but rather mortgage companies cracking down on it. Many are getting more serious about justifying increased sales of over 20% within the 12 month chain of title without repair receipts. Your realtor may know this and depending on how you are planning on structuring your financing, blowing you off. Realtors who really know the wholesale business will kow when deals won't really work despite the buyer having a "preapproval". You may simply not be worth their time if they think what your trying to do with financing won't work. I know that sounds cruel but this can be a cruel business. Hope that helps. By the way I have several of my Detroit properties listed on this sight so check them out and give me a call if you want.
MG
So as a wholesaler, why can't you just assign your contract to another buyer for a fee?
you can.
Tom
So if you assign your contract, this "seasoning" problem is no problem at all, correct? Can you use a trust on a contract?
I am not aware of any new MI laws pertaining to RE and flipping.
I may have found an answer to your question. However, it is not a michigan specific flipping rule.
"FR-4615 Prohibition of Property Flipping in HUD's Single Family Mortgage Insurance Programs,"
Re-sales occurring 90 days or less following acquisition will not be eligible for a mortgage to be insured by FHA. FHA's analysis disclosed that among the most egregious examples of predatory lending was on "flips" that occurred within a very brief time span, often within days. Thus, the "quick flips" will be eliminated.
See the TCI October Articles: HUD Limits Property Flips,
This is what I am now hearing too. The retail buyer cannot get financing through HUD but can get a conventional loan if they can qualify. Thanks for all the info.
You can't 'flip' hud homes, that is true. But flipping is legal in MI. Make sure you have a good lawyer, one who has a good reputation, and surround yourself with good investors. You can't go wrong~
I have closed 7 seven deals in michigan this month for investors.
Here is the scenario,
investor bought house: some hardmoney, some cash, some conforming loan, and one a rehabb loan.
Next step: We all figred out where to place ads, all potential buyers called, then they were pre-qualified, then a deal was worked, then we closed all seven loans by 01/23/2004.
All houses were bought between june and august of 2003. All houses were finished and ready to be up for the market by the friday after thanksgiving.
They were all under contract, by xmas, and the last one closed last friday.
So I haven't run into any problems buying and flipping properties in MI.
lori
[addsig]
The reason lenders started to become weary of flipping was there were people working off of false or inflated appriasals to get more cash out of a deal. Groups of people would do these deals together and ultimatly the poor sucker (usually a retail buyer) who bought the home for way too much money ended up holding the bag.
As long as your lender and title company are familiar with 'flips' and truly understand the process (and I wouldn't work with anyone who didn't- you dont' have time to educate people!!) you should have no problem flipping properties in michigan.