Converting primary residence to rental

Tampa, Florida
General Real Estate Investing
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Converting primary residence to rental

Koushik Saha
Sarasota, FL · Member since 2024 · 6 posts · 4 votes

Hello guys,

I have owned my house in Tampa since June 22 and now we are moving to our new house in the same area. We are planning to rent out our current house and have already found a tenant. Questions - 

1. My agent says that its not a good idea to notify the lender/bank about converting the primary to rental house. Could there be any issue if we don't notify the lender (or if we do)?

2. I need to change my home insurance policy from owner occupied to landlord policy. In that case, the insurance agent needs to list the lender name in the policy and potentially send them a copy? Is there a chance that the lender gets to know about this situation somehow?


I'm sure this is a pretty common situation for many of the investors in the community and would really appreciate guidance on the right course of action.

Thank you! 

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Raymond J. RodriguesBusiness Member
Lender · Miami, FL · Member since 2017 · 1k+ posts · 797 votes
1y

@Koushik Saha, as long as you lived in your previous house for 12 months, or so, then there's no reason why you cannot turn the property into an investment. Really though, you don't have to say much, if any, if you did, and all you need to do is change your insurance to a landlord policy. 

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  • JD MartinBusiness Member
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    Rock Star Extraordinaire · Northeast, TN · Member since 2015 · 10k+ posts · 16k+ votes
    1y

    If you have a mortgage that says you will occupy the home as a primary residence you may be required to refinance and/or sell if you move. It depends on the kind of mortgage you have and the language in your documents. Yes, there is a good chance your lender will discover you are renting the house out when you get rental insurance. 

    Just review your mortgage documents and see what they say. Some loan products will require you to refinance or sell if you don't occupy as a primary any longer. 

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  • Raymond J. RodriguesBusiness Member
    Lender · Miami, FL · Member since 2017 · 1k+ posts · 797 votes
    1y

    @Koushik Saha, as long as you lived in your previous house for 12 months, or so, then there's no reason why you cannot turn the property into an investment. Really though, you don't have to say much, if any, if you did, and all you need to do is change your insurance to a landlord policy. 

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  • Jorge VazquezBusiness Member
    Real Estate Broker · Tampa, FL · Member since 2017 · 1k+ posts · 680 votes
    1y

    Hey Koushik, congrats on the new place renting out your old home in Tampa is a solid move. After doing this for 25 years, I’ve seen a lot of people in your exact spot. Honestly, if you’ve lived there for a year and your mortgage is in good standing, most lenders don’t care or even notice when it becomes a rental no need to go out of your way to tell them. That said, switching to a landlord policy is a must, and yeah, the insurance company usually notifies the lender, but I’ve rarely seen that cause issues. Also, since you’re not living there anymore, this is a great time to lower your insurance coverage down to the new balance on your loan it can save you some cash. Just make sure you’ve got a solid lease, screen your tenants, and treat it like a business. You’re off to a great start! PS: That’s exactly how I went from 0 to 32 properties in 10 years started house hacking just like this. Let me know if you ever want to chat more. – Jorge

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  • Koushik Saha
    OP
    Sarasota, FL · Member since 2024 · 6 posts · 4 votes
    1y

    Thank you everyone for taking the time to respond to my questions and for providing thoughtful answers. 

    I carefully reviewed the closing package and found a document that clearly states, I need to move in to the property within 60 days of closing and maintain that as my primary residence for at least 12 months. This aligns with what most of you have already said so I think I'm in the clear. I have already gotten quotes for landlord coverage but unfortunately they're a little higher than my current insurance premium.

    Again, thank you for your valuable thoughts.

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  • Wale LawalBusiness Member
    Real Estate Broker · Houston | Dallas | Austin, TX · Member since 2018 · 5k+ posts · 2k+ votes
    1y

    @Koushik Saha

    Congrats on the move and turning your first home into a rental—great step toward building wealth! Here's the deal: while many lenders don’t actively check if you’ve moved out, not notifying them could technically violate your loan terms if you’re still within the first 12 months of owner-occupancy. As for insurance, yes, your insurer will likely send the lender a copy of the new landlord policy, which could tip them off. To avoid potential issues, it’s usually best to be upfront or wait until you’ve met the occupancy requirement—if you’re past that, you’re generally in the clear.

    Good luck!

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