Flexibility of FHA Owner Occupancy status?

4 Replies

Hey! I'm Matthew, I'm fairly new to the world of real estate investing and rental properties, though I'm very excited to be diving deeper into things. I've been looking at 3 unit rental properties in the Manchester NH area that, while being able to net a solid positive cashflow right out of the gate, would produce less cashflow with me living in one of the units for a year or so while I save up for my next project. So my thought to increase cashflow right out of the gate would be to purchase an RV, park it on the property, and live out of that for the majority of the year while all 3 units are rented out, netting me . However, since I'm most likely going through an FHA loan when I do decide to purchase a property, it is required that I am an owner occupant. So really my question is this; if I purchase this 3 unit rental property with an FHA loan, and if I live on the property in an RV, does that still count as owner occupation?

Thank you!

@Matthew Tusinski what you might want to ask is has anyone ever had someone check on the owner occupied status of an FHA mortgage? I have two mortgages both owner occupied both taken out less than 12 months apart from one another. Neither one has ever had anyone question the owner occupied status of them or ask to check in on them.

However if you start living in an RV that’s parked on your property I would bet the planning department would be notified in no time! It’s kinda stupid but I don’t think your legally allowed to live in an RV on your property but if it’s registered they can’t stop you from parking it on the street and a few homeless are already living out of them on the street so could be workable if your desperate.

You might want to live in a two or three bedroom unit and rent out the other bedrooms. This way you avoid the issue with the RV and have a better living situation for yourself.

@Account Closed yes, this would be a violation of the loan that you would receive.  The loan documents will stipulate that you will move into the property within 60 days of closing and that you intent it to occupy the property itself for 12 months.  Hope that helps.

You might get away with it, you might not. No one is going to be able to give you a definitive answer because this isn't the type of situation that's going to be accounted for in any sort of official documentation. My personal opinion is that I'd foresee you having more issues with the local code officer/zoning board/neighbors than you will with the lender unless the lot is relatively private. Also, were you planning on living in this RV through a New Hampshire winter? Most are not well insulated, and you'd have to take a lot of preventative measures to prevent all your sh*t from freezing (literally).

If you actually want to occupy the property for a year and limit your losses on the opportunity cost of the third unit, take the third unit and then get roommates to offset the cost of that unit. This also allows you to do minor renovations to the unit while you're living there. This is what I did and it worked out great.  

What most people overlook, that to be properly insured, you need a straight landlord policy, not an owner occupant policy. And when you change that policy, the insurance company notifies the lender. Most of these people not living in the properties, or even doing transfers to LLCs do not have the correct insurance policy, and are in essence, uninsured altogether because of that.