Do I have to live in property?

8 Replies

Hi everyone.

I'm new to BiggerPockets and have been going through the site for about 2-3 weeks now, just gathering as much information as I can about REI. I've learned a lot so far and am ambitious on keeping up the learning process.

A question about REO properties. I am in Rhode Island, and looking at Wells Fargo bank owned home. Wells Fargo promotes home ownership by allowing people who are going to live in the home 15 days from listing to make an offer, and then after 15 days offers can be made by investors.

My question is, can I put an offer in on a property in the 1st 15 days and have my brother live there for a couple of months during renovations and then rent it out or flip it? To make a long story short, I would like to put an offer in within the 1st 15 days rather than wait it out. Is this possible given the scenario of my brother living there instead of me (the purchaser)?

Hi Kevin,

Is the property listed on the MLS? The owner-occupied waiting period is common with HUD and FHA properties. Their rules are pretty strict. Not sure about Wells Fargo's rules. You could ask the listing agent.

Hope this helps!

Kevin, I don't have personal experience with the program you're describing, but over the years I have seen many clauses like that.

There are two aspects to the issue: 1) What can you get away with? and 2) what should you get away with?

For the first, I guess you have to look at the details to see how the requirement is checked/enforced. For example, is there some kind of "affidavit of owner occupancy" or something else that they want you to submit with the offer. If so, read it closely and decide if you're comfortable with signing it.

For the second, only you can decide whether it's OK to, essentially, lie to the listing agent and owner (bank) about your intentions.

However I would also ask, if everyone decided to do that, where would that leave the genuine owner-occupants who are trying to buy an affordable first home they can add value to over the years? (i.e., there may be a reason for the owners-only-15-days policy besides bank capriciousness)

Thanks for the responses Johna and Anthony. You are right Anthony it would be taking away from genuine people. I didn't think of it that way. Don't want to start off on the wrong foot in REI and stepping over others.

It would be loan fraud. During closing you'd be signing a document that you personally intend to live there, which you are not.

Not the best idea IMO.

I also recommend you don't lie and/or cheat to try to 'beat the system'.  It's not savvy investing..

If your brother is going to be living in the property then your brother needs to be the purchaser of the property not you. If you are planning on rehabbing it and then renting it or flipping it you are not an owner occupant you are an investor. If you try to cut corners and say that you're living there when you're not you'll most likely run into issues in the future. I would just be honest it's a good business practice.

Robert Adams, Real Estate Agent in MA (#9530304 ), NV (#62827), and RI (#18138)
NV: 702-349-9175

Occupancy requirements are for one year, unless there is a valid hardship shown and your brother is not you. Yes, it's fraud. Wait and then make your offer. These sales and loans made are reviewed after settlement, audited, so you don't want to go there unless you like orange jump suits. :)

You are all correct. Thank you for the responses. Won't be going through with this plan of action just to save a few weeks of time