Can I rent from myself and refiance?

[Katie Pellegrin]

I am in a situation where it would be easier and faster to rent from myself. Now my only concern is being able to refi down the road. 

[Paul Defngin]

Sorry, I’m not really clear on your question. 

Do you have a house that is currently not rented and you want to move and live in it, instead?

[Katie Pellegrin]

Yes I will live in it, rent from myself. Will I still be able to refi when renting from myself?

[Chris Seveney]

@Katie Pellegrin

I do not see the benefits from renting from yourself?

Typically for rent you can only claim a percentage as income and you would need to show 100% as an expense.

What is the benefit

[Erik Estrada]

Quote from @Katie Pellegrin:

I am in a situation where it would be easier and faster to rent from myself. Now my only concern is being able to refi down the road. 

 Would you still claim ownership of the property? I am a little confused on how you would rent it to yourself? 

[Mike Dymski]

It would be your primary residence...and you can refinance a primary.

[Paul Defngin]

Quote from @Katie Pellegrin:

Yes I will live in it, rent from myself. Will I still be able to refi when renting from myself?

 If you live in it, you would not be renting from yourself. You would be paying your mortgage, if there is one. If there isn’t one, you would just be mortgage free and just pay for taxes and insurance on the property. 

If the house is a duplex or multi unit, you could rent on of the units and live in one but from your question, I imagined that is not the case but could be wrong. 

Did you the buy the house as your primary home or an investment? If investment, why can’t you rent it to someone else?

[Ray Johnson]

@Katie Pellegrin You're missing some key information needed for a good response.

What is the legal structure of the Asset ownership? Corp, LLC, Sole Proprietor, etc.

[Katie Pellegrin]

I am buying the property with an LLC and PML. It is easier for me to buy the property with my business since blowing up this year rather then go the traditional route of buying. The difference is i will be living in it. My only concern is refinancing it to a lower interest rate with me living in it 1 and 2 it being in the LLC will a lender refi. I am familiar with brrrr but i need to know ill be able to refi out of the high rate.

thats why i essentially renting from my llc might be the answer  when refinancing. Also i want to keep thrle property in my business name will most likely stay 2-3 years then move.

[Nick Belsky]

@Katie Pellegrin

If you have a loan on that property and it was purchased as non-owner occupied, you'd be committing occupancy fraud by moving in and renting from yourself.  If you own it free and clear, then no worries.

Cheers!

[Katie Pellegrin]

Quote from @Nick Belsky:

@Katie Pellegrin

If you have a loan on that property and it was purchased as non-owner occupied, you'd be committing occupancy fraud by moving in and renting from yourself.  If you own it free and clear, then no worries.

Cheers!

  I am purchasing this property with one of my private money lenders who is fully aware of the situation I am only asking in regards to when I refinance the home. Thanks!

[Paul Defngin]

Quote from @Katie Pellegrin:

Quote from @Nick Belsky:

@Katie Pellegrin

If you have a loan on that property and it was purchased as non-owner occupied, you'd be committing occupancy fraud by moving in and renting from yourself.  If you own it free and clear, then no worries.

Cheers!

  I am purchasing this property with one of my private money lenders who is fully aware of the situation I am only asking in regards to when I refinance the home. Thanks!

That’s an interesting idea - and I don’t know that it will help you refinance. 

I suppose everyone’s question for you is what was your intention when you and your private lender decided to buy the house? 

Buy, renovate, and rent? If so, if I would rent it to someone else. 

I imagine you bought the house as a business and you renting from yourself so you can plan forward for a refinance in the future is in my honest opinion is not sensible business but I could be wrong. 

There are a lot of people looking to rent now, so hopefully you can rent it. 

If you are living in it and you are paying the mortgage to your private lender, and you go to refinance, you can still refinance, if you have other income source to be able to refinance then there shouldn’t be a issue as you are just refinancing your primary home.

That said, reading your post, I'm reading between the line that your question is whether you can use the rental income that you pay your LLC for qualifying-and that is where I don't think that will work.

Good luck. 

[Erik Estrada]

Quote from @Katie Pellegrin:

I am buying the property with an LLC and PML. It is easier for me to buy the property with my business since blowing up this year rather then go the traditional route of buying. The difference is i will be living in it. My only concern is refinancing it to a lower interest rate with me living in it 1 and 2 it being in the LLC will a lender refi. I am familiar with brrrr but i need to know ill be able to refi out of the high rate.

thats why i essentially renting from my llc might be the answer  when refinancing. Also i want to keep thrle property in my business name will most likely stay 2-3 years then move.

 What is the prepayment penalty on the current loan?

Few things to consider: 

If you refinance will you refinance into an investment property loan and then move out and have a tenant? 

If you refinance will you refinance into a conventional loan for an owner occupied residence and put the title under your name? 

There are many variables here 

[Jonathan Taylor]

@Katie Pellegrin you will have issues when refinancing an investment property with a non qm lender and renting it yourself. When we use rental agreements on refinances, lender asks for entity documents if being rented by a company. If you are listed as the sole or majority owner of the company, you’ll be committing occupancy fraud.

Best way around this is either refinance while vacant (lenders can use market rents off of the appraisal)o or rent it out to a tenant. It is not a good idea to violate loan docs.