I am a new investor. I am seeking advice on purchasing a potential rental. I would like to purchase with an FHA and live it for a year and then rent it out. I have done the numbers, but I cannot see the loss I would take for living in the rental for a year before I rent it out. Does anyone have advice on living in a property before it becomes a rental?
Hi @Samara Rivers ,
What you're doing is a popular method of buying properties. It would be even more advantageous for you to rent out a room in that property to ease the cost of your mortgage.
Keep in mind that you cannot keep doing that method, you'd have to change location (couple miles away or closer to work), or if you stay in the same location you have to buy a bigger property. If you don't, it's mortgage fraud, or they'll change your first mortgage to reflect the terms of an investor loan. The underwriter will stop you mid contract. If that wasn't the case, everyone would buy properties every year and do the same thing to take advantage of the great loan terms.
FHA is the most expensive loan out there. So if you can qualify for a conventional loan get one, you just need 5% down. There are different credit requirements, but the rate should be lower.
Hello Tom Parris,
Thank you for your response. This was definitely helpful. Especially the second paragraph - as I already own a home with my husband.
Thank you again,