Buying a HUD by moving out of my primary residence...

[Kelvin J.]

I'm trying to bootstrap my business with virtually no money (in the absence of a 'no money down' or 'subject to' opportunity). And have come up with a loose plan.

My income is not great but the condo i bought 2 years ago, and live in, now has equity ($40k). It is in a great rental location and I'm thinking of moving out of it and setting it up as my first long term rental. this is to :

a) generate cashflow ($200 net of operating costs and the rent I will now have to pay) and for improved Debt to income ratio (DTI) when qualifying for Homepath or FHA loans

b) Allow me to qualify to purchase a HUD home as my primary residence, to take advantage of owner/occupier status like low deposit of 3.5% and renovation loans.

c) qualify the condo as a rental property for depreciation and also, down the line, i can 1031 exchange it for a bigger rental property.

If I can work in a 203k loan or Homepath renovation loan at the ourtset it would be ideal, if not Lowes card for the kitchen and bathroom at least, and the rest pay for as i go.

I believe i have to stay in the property for a year but cant find where I read that. I would then repeat

I imagine there are problems with this plan and would be grateful if you BP folks could shine a light on them or tweak it into a better plan!

Thx Kelvin