Fannie Mae First Look:

bushleagueDecember 4, 2010

I am looking at a single family Cape for investment and it's an REO owned by Fannie Mae on their First Look program, targeted at first time home buyers. I have read that people are setting up single property LLC's and buying the home under the LLC, any credence to this?

The l.p. is $164,900, Zillow at $265,000. This would be a buy and hold (HUD Section 8 pays $1441/mo) as Fannie is trying to eliminate flipping. Thanks!

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brickeyee

"HUD Section 8 pays $1441/mo"

Nd the section 8 tenants will destroy the place, requiring well above any profit made to repair things between tenants.

    Bookmark   December 4, 2010 at 3:08PM
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sylviatexas1

Section 8 rules have changed;
tenants who damage their leased homes can be booted out of the program & become ineligible to get back in.

    Bookmark   December 4, 2010 at 5:11PM
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bushleague

Yes HUD in this particular area pays FMR, which is $1441/mo. Quote I received today was 4.5% on a 20 year, no points bringing PITI to $1080/mo, or a positive cash flow of $361/mo. This will be my fourth Section 8 property. In my experience, Section 8 tenants are a little higher quality since getting a nice house is the biggest thing to come across their plate in a long time. They tend to stay very close to the 'nipple' so to speak, and the houses are immaculate when I show up. Repairs between tenants, I wouldn't know, I have the same tenants year in, year out.

    Bookmark   December 4, 2010 at 5:29PM
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calliope

I suspect the section 8 clientele varies a lot by area. I don't think you'd be singing the same song here.

    Bookmark   December 4, 2010 at 8:08PM
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artemis78

Are you asking whether you could set up a single-property LLC to buy the home through the First Look program? If so, no. Investors can't put in offers on the home until after the First Look period is over. After that, you could put in an offer just as you would on any other property, and set it up as an LLC if you wanted to.

    Bookmark   December 4, 2010 at 10:49PM
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brickeyee

"Section 8 rules have changed;
tenants who damage their leased homes can be booted out of the program & become ineligible to get back in. "

As long as you are not their first landlord before they get booted.

    Bookmark   December 6, 2010 at 12:50PM
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