Buy and hold strategy when dealing with lenders

4 Replies

Greetings!

I am somewhat new to investing. I first bought my first rental turnkey using a conventional loan. My second deal was a flip that went bad. I was still able to flip it, but lost about 10k on this deal. BIG lessons learned. My primary home then became a rental after i moved to be closer to work. That was a foreclosure that we picked up back in 2008. Looking back it was a long live in flip. And now i am working on what might be a third rental.

I wanted to reach out to the community and ask about my dilemma. I recently reached out to one of my lenders to get the ball rolling on a new loan. My strategy was going to be to buy a property as a primary residence to live in. I had heard that if at least you buy one property a year and accumulate 10, this would be a good strategy to gain cash flow passively. So i figured i would go at it. This same lender provided an FHA loan for me and my family. I had used this lender once when at the time i lived 40 miles away from where i worked and i really wanted to cut down the commute. So my family and i decided to purchase a home closer to work. We decided to keep first house as a rental. A year has passed since i moved closer to work. This is where the dilemma begins. Apparently my lender says that there is a great chance that the underwriter will not give me another low down loan as a primary residence since it looks like i am an investor. It appears like i am taking advantage of the system. Am i doing something unethical?

Hey Jaime,

There's nothing unethical about your strategy. What your doing has been done thousands of times before you by many investors. The bank is just trying to protect their investment in you. You may want to consider using a different lender. I would stay away from FHA loans if you can because they are generally more expensive than a non-FHA loan. There are plenty of lenders that will help you with acquiring a rental property so that you don't feel like you're doing anything unethical.

There's nothing unethical about the strategy IMO and I've never heard of anyone getting turned down for this, but I guess it could happen. It might be worth talking to another bank or mortgage broker.

Originally posted by @Jaime Ruiz :

Greetings!

I am somewhat new to investing. I first bought my first rental turnkey using a conventional loan. My second deal was a flip that went bad. I was still able to flip it, but lost about 10k on this deal. BIG lessons learned. My primary home then became a rental after i moved to be closer to work. That was a foreclosure that we picked up back in 2008. Looking back it was a long live in flip. And now i am working on what might be a third rental.

I wanted to reach out to the community and ask about my dilemma. I recently reached out to one of my lenders to get the ball rolling on a new loan. My strategy was going to be to buy a property as a primary residence to live in. I had heard that if at least you buy one property a year and accumulate 10, this would be a good strategy to gain cash flow passively. So i figured i would go at it. This same lender provided an FHA loan for me and my family. I had used this lender once when at the time i lived 40 miles away from where i worked and i really wanted to cut down the commute. So my family and i decided to purchase a home closer to work. We decided to keep first house as a rental. A year has passed since i moved closer to work. This is where the dilemma begins. Apparently my lender says that there is a great chance that the underwriter will not give me another low down loan as a primary residence since it looks like i am an investor. It appears like i am taking advantage of the system. Am i doing something unethical?

 Na you aren't breaking any rules. You can get 10 owner occupied loans so long as you intend to live in each of the properties for at least 12 months after the loan closes. I suggest reaching out to some more lenders, your loan officer sounds far too conservative for his own good. many mortgage brokers would want to write those loans for you.

Thank you all! I really appreciate your input. I am beginning to look into other loan brokers as another route. Hopefully all goes well. My market is in Houston, TX. and is pretty competitive right now. Just have to keep moving and prepare for the process.