Why must I live here??? Question???

Question

I'm fairly new to this Real Estate game we all play I have closed a few deals and I do own 3 properties free and clear. I just seen a property listed on the MLS I'm extremely interested in less than 30000$ this property I'm interested in sold about 10 yrs ago for 65000$. From pictures looks can be deceiving looks to be a good deal. ( I'm a merchant marine currently in Persian Gulf just a disclosure. ) I asked for information about the property through email. And the reply that this property is only for sale to a buyer that will live in it. After purchasing it. My question is why if I offer all cash, quick close, as is, no contingencies. Why in the world would I have to live there it's mine. I should be able to rent it, flip it, burn it down if I want. What am I missing. Also a couple yrs ago this happened to me also and decided to pass. I don't want to pass on this one. Help me understand and what possible outcome or consequences could there possibly be if I decided to buy and rent a house in own????

Mike Cumbie · Answer

Hi @Andy Ballester,

It is the same idea as you can't get a government backed loan for an investment. If they are asking the general public to back a loan, they want it to be for someone to live in, not for someone to make money off of. If the bank is taking a hit they want to be able to write it off as a place for someone to live in, not for someone to make a profit on.

You are essentially asking "Why can't I go to a soup kitchen, take the free food and sell it to low income families for a profit"? "How dare they stop me from doing that"!

Just my 2 cents and good luck with your business!

Greg H. · Answer

HUD and FNMA along with many banks have a owner occupant period when the property is first put on the market.  FNMA is the first 20 days(First Look) and HUD(Exclusive period) is 15 or 5 days.  15 days is the common number for most banks

During this period the property is only available to owner occupants who intend to live in the property for a period of time(Usually 1 year).  If the property is not sold during that period, it will become available to investors.

Penalties for violating the agreement to live in the property can be fines in excess of $100,000

Greg H. · Answer

@Chris Low

You are correct that promoting home ownship is the goal. However, an owner occupant only period applies to every FNMA, HUD, Freddie Mac and major bank such as Wells Fargo and BofA. It doesn't matter whether the property is listed for $5000 or $500,000

Jacob Pereira · Answer

Plenty of people here have given good examples of why there may be a requirement for you to live there, but given your situation, you might be able to justify it as your primary residence anyway. There's no clean definition of what a primary residence is, you just have to show intent. The IRS website is full of borderline examples you can look at that makes it a primary in their eyes, at least. In my personal case, I like to travel around and probably only spend an average of a few months a year in my own bed, but it's still my primary residence.

If you're legitimately going to leave it vacant for a year, you could make the argument that it's your main home, but to cover yourself, you should lay down as many arguments as possible as to how this is your real home. If it's feasible, put it down as your mailing address, visit it on every trip to the States, maintain utilities and keep a bed there, and absolutely DO NOT rent it out. Keep in mind that this is tenuous legal ground and it's not super well-defined, so tread lightly. Before you just follow the advice of some internet yahoo, I'd recommend you reach out to a lawyer who is familiar with precedents of cases where people tried to toe the line as you're trying to do.

Good luck, and I hope you follow up this post with what happens.

Jeff Filali · Answer

Just another example of too much Government regulation... I'm so ready for the anticipated DEREGULATION promised by Trump to begin this year.

Andy Ballester · Answer

@GregH couldn't I just purchase do minimal rehab and just hold for yr pay taxes insurance etc, then do as I wish??

Mark Holencik · Answer

If I want to sell the property at a discount I can make conditions.

The city's do it all the time.

Habitat for Humaity sells at a discount with conditions.

Jay Hendricks gives a property away every year here, he has conditions, this would be the same.

If they were asking the going price, you may have a case.

Andy Ballester · Answer

It is a foreclosure, definitely no HOA fees thanks for reply.

Mark Fedorov · Answer

Two things I can think of:

- I know that some HUD programs require that the buyers live there. If it is a foreclosure or a short sale, I would guess that.

- If there is an HOA, there could be association laws forbidding the rental

Otherwise, denying a person from purchasing real estate could be red-lining and sort of really illegal.

... of course the best way to find out is to ask the person who told you.

Andy Ballester · Answer

Just an update, property was listed for 21000. I offered 24500 and it was not enough they ended up excepting someone else s offer. I guess I will try again in the future thanks for responses.

Why must I live here??? Question???

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