All Forum Posts by: Jordan Roberts

Sounds good. Tell your insurance guy as well. Like I said vacant insurance can be much more expensive than occupied. Maybe you have a relative you trust that could stay there for free if they cover the utilities and you save on insurance. 

Dunno. Ask your lender? Or pay the extra 1/2 penalty for investment property and rent it out right away?  As long as you make it your primary officially I don’t think they care how many nights you sleep there. But you’re going to lose more in lose rent than you’re going to save in interest. 

What Is Occupancy Fraud?

The term occupancy fraud refers to a form of mortgage fraud that occurs when the borrower lies about the occupancy status of the property, stating it will be owner-occupied. Relatively common, borrowers commit occupancy fraud to get better interest rates on their mortgages. That's because lenders offer lower rates for owner-occupied homes compared to investment properties.1 Borrowers who commit occupancy fraud may face serious legal and financial consequences.

So what happens to borrowers who lie about property use and are then discovered? Lies on mortgage applications are considered to be banking fraud.4 They can trigger severe financial penalties, prosecution, and even prison time if convicted. For one thing, lenders can call the loan and demand immediate payment of the full mortgage balance. If the borrowers can’t afford it or refuse to pay, the lender typically moves to foreclose. That usually destroys the borrowers' original plans. In cases involving multiple misrepresentations, lenders can also refer the case to the FBI.5

As long as you have enough money to pay off the loan if they call it due and they don’t prosecute you criminally you should be fine. You PROBABLY wouldn’t get caught as long as you change your driver license, credit cards, checking accounts and irs address, and so on to the new address. I mean obviously you don’t want the mortgage statements or the 1099 sent to your old address. I mean you will be signing at least once during the process that you plan to live there  so there’s no claiming ignorance or innocence  

But sure, why not screw over the company willing to lend you money to save 1/2 of 1 percent  good plan. Heck they deserve it for trusting you  

Oh, thought of another fun fact. Your insurance on that property will have to be primary residence, 2nd home or rental property insurance. Ps. The bank will get a copy of that policy. AND, if the property is unoccupied for more than 60-90 days none of that insurance will be valid. You’ll need to apply for unoccupied property insurance at a much higher rate. And again, the bank will get a copy of that policy. 

So you'll be living elsewhere? If that happens I suggest maybe renting out the other rooms so you're not "eating" the full bill.

Most lenders don't really care unless you miss payments. Through networking I've met some (to a lot of) ppl who use owner occupied loans but aren't really ocupying the home. Its not ethical per se, but no one is really gonna knock on your door to verify you live there. Just my 2 cents

No one is going to knock on your door to make sure you are living in the house, and although it's not "right" some people do rent out properties as an investment immediately after using an owner occupied loan.

BUT if the bills are getting paid, the house can stay vacant...

Can anyone tell me the details about the exemption for owners who own no more than 2 properties with Prop 15?  I currently own 1 rental home in California and one in Indiana so I believe , if Prop 15 passes, it would not apply to me.  However, if I buy a second rental home in  Indiana  ( so I own 3 total) could I potentially be required to comply with the Prop 15 rent control on my California home if Prop 15 passes?  Thanks!

I think we all see your points and it concerns us as well, that's why we are attempting to stop the utter nonsense the best that we can now. These things I believe have a tendency a run a course where the pendulum that has swung far to one side reverts back to the center by the force of its own weight. We just saw a really big part of Boeing leave Seattle just today likely in part because of the absolute lunacy of their bien pensant government. But we will see what holds for California, many are leaving already. How many other will leave in the end who knows. It still has many good attributes, but I would not be buying here now.

All of my properties are free of debt, and I'm well into the 7 figure profit zone, so its not all bad. Plus all of my properties easily cash flow and have great top shelf tenants, but that was attributable to really good timing, property and property management selections, and ignoring the strategy Du Jour in favor of time tested hard solid analysis and sage advice (Buffet/Munger). 

Personally, I won't be hit by Prop 15 even if it passes this time, but I also know the current proposal is supported by folks that have from the very get go wanted to utterly destroy Prop 13. Its no more than their fairly transparent short term ploy to leverage one group against another until all are so weak individually that where they couldn't be beaten as a group, they will be relatively easy pickings individually. 

We can't let that happen.