Real Estate Investor · Cebu, Philippines · Member since 2008 · 297 posts · 5 votes
Then buying another one and saying that you are going to live in it. What kind of trouble can you get in doing this?
I am buying 2 houses one will be owner occupied and one will not. Next I would like to buy a third house from a second bank and tell them that I will live in it in order to get a better rate and less down. Is this trouble? will they ever know?
Does it sound ethical to you? I hope not.
Regardless, it is fraud as Josh and Jon have both informed you and not only can the mortgage company call your loan due, they can also have you arrested for fraud.
When investing in RE, get investor loans, be honest, and do not buy if the numbers do not work without you cheating!
Additionally - banks do catch on. When they see that you have 3 mortgages on 3 different properties and you tell them you need a new one for an "owner-occupied", well they're just not so quick to buy it anymore.
Everyone of course is right that this is fraud. The most important thing you have in life is your integrity, so I would never give it up just to save a couple bucks on a loan.
This is probably a dead topic, but I think when you're starting out you'll come across what you might think of as opportunities when in reality they're traps. The shortcuts get you into trouble. You'll have plenty of opportunities to screw tenants, realtors, banks, vendors, the IRS, etc, etc. Whatever you do keep it legit. As a LL/REI I've had my integrity tested often. At the end of the day I can sleep soundly knowing that I did the right (and sometimes more expensive) thing with my integrity intact.