I am looking for creative insight on a complex deal. I’m weighing pros and cons and seeing what the best case scenario I can do, and if anyone else has done anything similar to this. I’d love to hear your thoughts on how to navigate through this deal/situation. I love how creative this community is!

This spring I purchased an off market investment property to BRRRR. Using hard money and rehabbing and now in the middle of refinancing out of the loan.

Unfortunately I purchased right before the interest rate hikes, and spent more in rehab than initially quoted (found things behind walls, bad roof, etc), and since interest rate hikes I’m trying to salvage what I can from the deal.

I am working with a lender on the loan and will have to bring cash to closing table for the deal, for a conventional investment property loan.

Also while rehabbing the property, I moved in with a friend, to put my primary house on Airbnb. My BF and I are intending to buy a house together next year and use said funds for a down payment for a primary.

The investment property is in Charlotte NC area. I would move in/change my address to live with the BF but he is in SC, and I’m in NC and W2 Job is located in another state (I’d have to file taxes for 3 states with my W2 job in one year). At the end of the day I’d like to avoid the nightmare, and the plan is for us to purchase a primary in NC in 2023.

Lender said since I just moved in with my friend and within next 12 months the BF and I will buy a primary, I could get away with a lower rate for a primary loan, and I'd walk away with cash at the closing table. Instead of the investment property loan 75% LTV I would get 80% LTV with a primary loan. We talked and even though I have no intent on living at the property and renting it from day one, He said you can get away with a primary res loan. He said people change their plans all the time when they buy a primary. So just say it will be a primary but my plans changed and I made it a rental if they ask. Friends in the investment real estate business say lenders never pursue the due on sale clause or investment issues as long as the mortgage is paid each month. Has this been your experience?

Is this skirting on mortgage fraud? Did he really suggest it? The original plan was to proceed with the investment property loan and quit claim it back to my LLC.

Also I am worried about my liability. If I did refi it to a Primary, I have an Umbrella Policy, would that be enough liability coverage when renting? I'm aware I cant put a primary into LLC. But putting it in to an LLC is my preferred option.

Should I change my primary address to the investment property for the Primary Loan?

We have our goal set out for next year, trying to strategize. Having this investment property would bring in about an extra $100 per month in cash flow. So I want to take the lenders recommendation but I don’t want to do anything that would get me in trouble with the lenders. I have been told they don’t care as long as the mortgage is paid but I want to hear from others experience. Thanks in advance, I look forward to hearing you’re thoughts and posts.

Charlotte, North Carolina

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