First time buyer (owner occupied) after investment purchase

[Chris H.]

Hello BP community,

I'm looking for some help. I currently rent and do not own property. I'm looking to purchase an investment property first because buying a house for my family right now, financially isn't in the cards and I want to begin my REI path. So my question is this, how will buying a (non owner occupied) rental property first, impact buying a primary residence later (hopefully in a few years) with a low percentage down or first time buyer type loan ? I'm concerned about not being unable to take advantage of something like that because I technically won't be a first time buyer.

HELP ?

Chris H.

[Scott Smith]

@Thomas Franklin thank you for clearly defining the issues. A thorough response as always.

I have my own take, and as any attorney will say, this is not legal advice...

For the asset protection purposes you need both (1) insurance and (2) properly structured company for litigation protection, an LLC/LP/etc.

Insurance protects your from nuisance that occur on the property; i.e. slip and fall

The company structure protects your assets from litigation liability; i.e. gross negligence (health and safety, alleged known hazards, fraud in the sale of the property) as well as someone getting to your assets by suing you personally (e.x. you got into a car wreck that exceeded the coverage of your policy, now they can go after your assets)

The due on sale clause is often a concern, but me and my colleagues view it as a very low risk for a number of reasons. This risk can also be further minimized by placing the property in trusts which appear to be for estate planning purposes but in actuality are in order to move them underneath the protection of your LLC. If you want to know more about this, please PM me.

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