Updated over 7 years ago on . Most recent reply
How to qualify for my second property
Hello I purchased a property with conventional financing in September and want to look for a second property to occupy. My goal is to turn the first property into a rental and live in the second property for a year through FHA and eventually turn that into a rental. What is the easiest way to qualify for a second property? Do I have to live in the first property for a year or no? I plan to have 5-10 rental properties in five years. Any feedback will help. Thank you for your time.
Most Popular Reply
Hey Elon, this is something I did. I started with a 4 plex and wanted to find another property to purchase. If you wait a full 12 months (1 yr requirement of occupancy for most Owner Occupant loans) you can typically do what you want. However, if you are trying to get out of a OO property before the 12 months, it might be a bit trickier.
When I tried to buy my second property after getting a 4 plex here in Connecticut lenders basically told me to either wait a year, or buy a SFR. The reason I would be allowed to move down to a SFR on another OO loan was because I could claim that I was moving out for more privacy. This was apparently "OK" with the banks, and that's what I did. I found a SFR with equity built into the purchase price. That along with some forced appreciation over the first 24 months of ownership should net me the same as what 2 years of a rental property would (assuming I sell). And it will be tax free at time of sale!
Just another thought to consider.
Enjoy the ride.
FP