Turning condo into a rental after a recent refi?

Question

Hello,

Newer to REI with one SFR i purchased a few months ago, but am looking for more everyday. I myself am currently in a condo and ithe thought just came across me today that i would do great with renting out my condo with what i owe on it. This would take place of buying 2 less expensive SF homes and i would then just purchase a house for myself to live in, which is what i want anyways.

The question is i just Refinanced to a 15 year at the end of last year. I believe there was a clause saying i could not sell or rent for 12 months? Just trying to get clarification on this. If i were to find the perfect house i want to be ready.

Thanks!

Keith Barton · Answer

2 issues to look into:
1) Nobody on this forum can tell you what your mortgage says. Find it, read it, if you still have questions about a particular clause, feel free to ask specific questions about specific language; however, just because someone offers an opinion - it doesn't mean the opinion is right.

2) Look through your condominium governing documents to see what, if any, restrictions are placed on renting your condo.

Steve L. · Answer

I am of the opinion that verbiage is in the contract so you cannot buy a primary residence every 3 months, rent it out and get a new loan.

I don't know how a lender would know?  The contracts do not discuss the recourse if you break this rule.

Your ability to get a loan on a primary residence with a new loan on your credit might be difficult.  Usually lenders want to see it seasoned a bit.

I signed a similar document on my property and I am just renting it out now.  I'm not worried.

Keith Barton · Answer

Some things are treated differently on paper as compared to in practice. Certain things are in the contract because the bank wants whatever protection those clauses provide; however, they may let those things slide in practice knowing they can fall back on the contract language if they need to.

Tim Burk · Answer

Thanks, mine said something along those lines. I got in contact with my lender and he said it would not be a problem to turn it a rental before the 12 months.

James Campbell · Answer

Hi Tim. I also live in a condo so I pulled my contract... This is what mine says:

So in my case, my contract is pretty straight forward. If I moved into my house right away, and I don't have written consent from my lender (and assuming I'm not in trouble of making my payment on time) then I need to occupy my condo for at least a year before I can rent it out.

I don't really have an experienced opinion, since my year's already past... Maybe get ahold of your lender and see what they say.

Tim Burk · Answer

Well i did read through my mortgage and it was not very clear on the topic so i thought i would ask around. I did get clarification that there is nothing forcing me to stay for the 12 months as i thought there may be.

Turning condo into a rental after a recent refi?

Most Popular Reply