Turn primary residence into first rental

6 Replies

I have lived in my 3/2 1600sf house for almost 6 yrs. I refinanced over a year ago and my monthly payments are approx. $450 a month plus about $3500 in yearly taxes and HOA dues (it is in the Houston NW suburbs). It could rent for about $1200-$1350 a month.

I purchased the house to eventually rent out as it is a great size and in a great location. I'm curious as my refinance was with my Credit Union, and the loan has since been purchased by Fannie Mae (owner) w/ the Credit Union managing it, per a letter I received. Can I rent the house as it'll no longer be my primary res.??? I reviewed the contract and have fulfilled the 1yr requirement. Is it common for contracts to have a clause while there's a loan it must remain ones primary res??? There's one paragraph that I've read that appears to say that but as I'm not a real estate attorney I could (& prob am) be mistaken. Just curious of people's thoughts and experiences with this type of situation.

Thnx!

Drew

Budgeting also for insurance, maintenance & capex (10%), vacancy (10%) and property management (10%), this home will cash flow at about $30/month at the lowest rent price point ($1200). If you happen to get more rent and/or self-manage, even better.

The clause you are referring to sounds like something you'd see with a FHA loan, and yes, it is common in order to get the attractive interest rate that you owner occupy for a certain length of time, generally one year. After that, you can turn it into a rental no problem.

Cypress is a great area with a wonderful school district. This would make an ideal rental - hopefully you have somewhere else you can go without increasing your cost of living too drastically.

Sharon Tzib, Real Estate Agent in TX (#653488)

Thnx the the advice,

@Sam, you mean the "live 2 of the 5 most recent years" to avoid capital gains? I was thinking if holding it for longer then that. You recommend renting for 3yrs and selling (by the end of the 3yr mark)???

Sharon, I imagine maybe an FHA. The original loan was conventional and and the refi was w/ the same credit union. We would be willing to even down size to a condo or something else , live there then turn that into our 2nd rental.

@Drew D Exactly the way I started. My first four are rentals, number 5 is likely to become a flip but it was a cash purchase.

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