First Investment mistake

[Seth Atwell]

Me and my wife bought our first investment property back in August 2019 in Knoxville TN. We were not very educated and had not yet come across BiggerPockets or talk to many people about what we were trying to do. We ended up buying the house as a second/vacation home because we are not yet residents of Tennessee because I am still working in North Dakota in the oil and gas Industry. We plan on transitioning to Knoxville in August 2020. The problem we are having is that our mortgage company is saying that we can NOT rent the house out because we bought it under the pretends that it would be a vacation home or a secondary home out of state. Can anyone help us with this or tell us how to jump this hurdle so we can continue to BRRR ( buy renovate rent refinance). Thank you I hope to hear some feed back on this. I'm sorry for being so ignorant on the subject. We are new and eager to learn. I don't take NO very well so I will find away around this. 

[Victor Jernigan]

@Seth Atwell - I strongly suggest you re-read the @James Allen comment about MORTGAGE FRAUD. As I tell new investors: Real Estate Investing, if done correctly, can create generational wealth; however, if done incorrectly, real estate investing will create generational poverty because your losses can be multiple times your initial investment. 

You can not afford the risk of violating either the loan covenants from your lender or the non- rental clause which is certainly in your insurance policy. Maybe you will not get caught, but even at a 1 in 10,000,000 chance, it is still too much risk for you to take.

As a quick example, if you were to follow the unmitigatedly bad advice of @Arn Cenedella and your "down low" "roommate" started a fire which burned the house down, your insurance company would deny all coverages and then sue you and your wife for fraud. Since the bank required you to provide them with notice of insurance coverage when you closed the loan, the insurance company will notify the bank immediately about the uninsured fire loss. The bank will then sue you and your wife for all losses (with the most likely result you both go bankrupt). If someone was hurt in the fire in which you claimed to live in the house when you had the utilities turned on, you and your wife will be prosecuted criminally. I can go on but that should be enough for you get the picture.

If you can not make the payments on your own, borrow from a relative, sell now, or contact @Matt Castle for the names of lenders who may help.

You only have 8 months of mortgage payments left to make due to your lack of knowledge and bad judgement. Do not compound your mistakes.