short term primary residences for future rentals?

[Casey S.]

There are a number of local foreclosures that would make good rentals. These homes are newer than my current home and as large or larger. I am considering buying one to move into and renting out my current house. Waiting a little bit and doing it again. The main advantage would be the financing since each purhase would be for a primary residence instead of investment property. What will the major mortgage companys say about me doing this? Is there an amount of time I would need to stay in one before buying the next? Any other thoughts I should consider besides moving being a giant pain in the rear? Thanks!

[J Scott]

If you're planning to purchase as an owner occupant with either an FHA or conventional loan, you should expect to have to live in the house for 1 year before you convert it to a rental property.

While you can have multiple conventional loans (up to 10), I believe you can only have one FHA loan at a time, so you'll likely need to come up with 20-25% in downpayment for each property.

That said, to build a long-term portfolio, adding one-house per year in this manner is a great way to go about it. Assuming you don't mind the hassle of having to move every year... :D