Experience buying a duplex as primary residence not living there?

Member since 2021 · 5 posts · 9 votes

Hi everyone,

Anyone have experience with buying a duplex as your primary residence but not actually living there and renting it out? Contrary to living in one side and renting out the other?

Legality of it, tax implications etc?

Thanks for all the help!

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SC · Member since 2020 · 3 posts · 15 votes

There are no tax implications because you'll be in jail for fraud

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Michael L.
Member since 2021 · 1 post · 0 votes
5y
Are most of these responses concerning fha? I thought the marination period of 4 months on conventional was the minimal occupancy required before being able to move.
Il call my lender on Monday but this is what I was advised.
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Joe SplitrockPro Member
Moderator
Rental Property Investor · Sioux Falls, SD · Member since 2015 · 9k+ posts · 18k+ votes
5y
Originally posted by @Austin Marvel:
Drama. I didn't commit fraud, this is my primary residence and I sleep there most nights...when we're in town and all of my mail comes to that address. These are brand new renovated units, I can choose between the sizes; Small, Medium & Large (3) depending on if I have just my wife, my whole family, friends ...etc.

Instead of traditional long term renters for the other units that I'm not using I chose to go with short term, it's a great location and I love hosting guests but also being able to have access to each unit depending on how I'm feeling that week. One of my main clients is a 3 minute drive away...I'm not getting around anything...this house is much closer to the airport and the highway than my wife's house out on the lake. Since we're constantly traveling to visit family and friends...this house was the perfect solution.

As for her house, we stay out there on the weekends that we're in town & sometimes rent it out to friends when we're traveling.

For my particular situation, you could see how from the outside it may seem sketchy but I assure you it's not.

My lender knew everything I was doing and talked in depth with my lawyer about this to make sure we did it the right way.

@Joe Splitrock
When I was using quotes and weird verbiage that was just to imply that in theory some situations can be catered to.

Please don't insult our intelligence. Nobody here is going to report you, so your lies are safe. As I said before not getting caught is different than not committing a crime. I am telling you that for you own good. None of us care.
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Christopher Garcia
Real Estate Agent · Miami, FL · Member since 2016 · 39 posts · 24 votes
5y
Hi Andrew,
The first property I bought was a triplex and I bought it as my primary home with a 3.5% down. I have never lived there and it was one of the best investment I have ever done. Now, this is not legal, you are supposed to live in the property. (Change your license and mailing address to that address). Please let me know if you have any other questions and I will be glad to help you.
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Jacob Reyes
Member since 2021 · 1 post · 0 votes
5y
Did you ever run into any problems with mortgage fraud?
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Christopher Garcia
Real Estate Agent · Miami, FL · Member since 2016 · 39 posts · 24 votes
5y
I have not ran into any problems. Knock on wood :)
1 Reply
Alisa K.
New to Real Estate · El Dorado Hills, CA · Member since 2021 · 14 posts · 2 votes
5y
did you rent out the unit you "lived in" or had it sit vacant?
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Bill F.
Investor · Boston, MA · Member since 2015 · 1k+ posts · 3k+ votes
5y
Originally posted by @Steve K.:
Originally posted by @Daniel Smyth:
@Nick Pacanowski
No. List one person that has happened to!
I have yet to see the case.
I have also not seen a bank that will call the note due when such happens.
Curious to see when this has happened.

Plenty of people get busted for mortgage fraud. Granted, it's likely a low percentage compared to those who get away with it, but it is a crime that is enforced. This has been the case ever since the global financial crisis of 2008-2010 which was of course caused in large part by unscrupulous lending practices and mortgage fraud. The FBI, SEC, etc. have dropped the hammer on fraudulent activity since then. I don't know anyone personally who has done time or had their loan called due for mortgage fraud either, but a quick google search produced this:
https://www.ussc.gov/sites/def...
2020: If I'm reading the data correctly, it looks like around 65,000 cases reported/investigated, with 4,500 of those resulting in mortgage fraud convictions, of which 87% were sent to prison, with average sentences of 18 months (down from avg. 22 months a few years before). Maybe a mortgage broker can weigh in on this and enlighten us on how often loans are called in these scenarios. Even if there's a small chance of getting caught, I'm not going to risk 18 months in the clink plus big fines and having my loan called plus ruining my creditworthiness just for a lower rate personally, but I'm not a gambling man.

Daniel, that didn't go the way you thought it would huh?
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Valerie R Haugen
Member since 2021 · 3 posts · 0 votes
5y
I would be very, very careful. You are supposed to stay in your primary residence property for at least a year before shifting. Less than a year before you want to shift to/finance another primary residence property will raise red flags with the underwriter - unless there is a VERY GOOD reason, like your job shifted out of state. If you don't conform to the reqs, you will have trouble getting a loan if you want to buy another property as your "primary residence" and may get looked into for mortgage fraud.
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