Buying House Hack as Primary without Fraud

[Abe Alam]

Hi Folks,

I’m interested in buying a multi family as my next investment as a house hack, but then eventually moving back into my primary. 

My lender told me that having tenants Sign a contract before moving out of my primary would increase the likliehood of underwriter approval. 

Does anyone know if there are any lease limits to this (for example, can I use my home as a STR and buy the multi family as a primary?)

What’s the best way to do this? What have you seen done?

[Will Fraser]

Hi @Abe Alam, I appreciate the heart behind your question here!

In general lenders don't like STRs (short term rentals) . . . neither do insurance companies for that matter. I don't know if it is because its en vogue or higher risk or something else, but all-in-all without having operated it as an STR for a year or so and having it on your tax returns it is unlikely the lender will consider STR income in your current primary residence for qualification.

However, the common route people go here is to discern the market value of your current home, feed that information to the lender with a, "hey Lender, my home should (conservatively) rent for $X/month here . . . IF that were true, what would I be able to purchase."  Figure out the financials of the purchase and then when you are under contract on your replacement home you can start marketing your existing home for lease on a 12-month lease.  You'll need to be in your house-hack for at least 1 year under normal circumstances in order to comply with the owner-occupancy obligations there.