Conventional Mortgage with Criminal Neighbors as a Househack

[Jamie Dupont]

Hi BP community,

I recently purchased a 3/3 double in South Buffalo (I’m not from the area). I spent about two years searching with a BiggerPockets-recommended investor-friendly agent, and I was very clear about my goals. The property seemed like a good fit in what appeared to be an improving B/C neighborhood with a mix of well-maintained single-family homes and a few multifamily properties.

My plan was to house hack for about a year and then rent out the upper unit once I met my occupancy requirement. I also own an Airbnb in Florida and a single-family rental in Rochester, so this isn’t my first investment property.

However, after moving in, I’ve encountered ongoing issues with the immediate neighboring property that I did not anticipate. There is frequent activity there throughout the day, including loud disturbances, large groups of visitors coming and going, and general behavior that has created a stressful living environment. I work remotely from home, and it has become very difficult to concentrate or feel comfortable in the property.

I’ve documented multiple incidents over the past couple of months, and another neighbor has also expressed concerns about the same property. My lower-unit tenants are generally fine and not heavily impacted, but they have noticed some of the activity as well (primarily noise and nuisance-type issues such as littering on the property and most likely criminal activity that I cannot prove at the moment, but do notice there are signs. 

I’m feeling uncertain about how to proceed. I’m concerned about my ability to fulfill the one-year primary residence requirement for my conventional loan given the impact on my quality of life and ability to work from home. I do have a motorhome and have used it periodically to get some relief from the situation, but that’s not a long-term solution.

I’m looking for advice from anyone who has dealt with something similar:

• What options do I realistically have if the living situation is affecting my ability to stay compliant with loan terms? Selling is not an option as I did ask my agent and obviously she advised against it due to the loss I will take on this property.
• Are there effective ways to address ongoing nuisance issues with neighboring properties especially if you feel they are part of a larger organized crime situation? I do not feel very safe approaching them based on what I have experienced. 
• At what point would you consider cutting losses vs. trying to ride out the year v.s. renting out the upper unit to a working individual/couple that may not notice what is happening on this street?

Appreciate any insight or perspective from those who’ve been in this position.