Posted by David on August 26, 2003 at 13:25:32:
Awsome response… listen to him
And may GOD Bless
David
First Rental home - need opinions - Posted by DanPA
Posted by DanPA on August 26, 2003 at 06:32:37:
I have a duplex under contract that I am debating whether to put 20% or 5% down on. The house is 160k and I am buying it as if I will be an owner occupant. I will not be though. The rents are 1k each side.
If I only put down 5% it will keep my bank account fat but I will make around $350 less a month from the rent. So I am thinking 20% might be better, I can then just get a line of credit if I need the cash. I am not planning to buy my next house for about 1 year.
Re: First Rental home - need opinions - Posted by Gavin Wilkinson
Posted by Gavin Wilkinson on August 27, 2003 at 11:00:13:
If you are going to commit a felony, may I recomend bank fraud. You do not need any down payment at all, and the returns are wonderful.
My personal preference is armed bank robbery. Why waste all the time collecting the money each month. Just collect it all from the teller on the first month.
Re: First Rental home - need opinions - Posted by Clemuel
Posted by Clemuel on August 27, 2003 at 04:40:42:
I have said every investment of my five are owner occupied. Never had a problem, though I always pay on time. I use a post office box for my billing address. Just be careful about your insurance. Talk to the broker to see what you need for proper coverage. Don’t p–s off the bank and I think you’ll be fine…
Also, put down the least you can. Real inflation rates are about 10%, so your money in the bank will soon be turned to pennies by inflation, wherein the cash flow will always be real, current dollars. You’ll also have more money for additional investment and less risk should you ever have to walk away from the property.
Thats my take on this…
Clemuel
Re: First Rental home - need opinions - Posted by WaynePa
Posted by WaynePa on August 26, 2003 at 22:20:20:
Dan,
I would listen to what they have to say, I mean in the long run it could turn out to be much more trouble than it is worth.
By the way, where in Pa. are you located?
Happy Investing
Wayne
big mistake… - Posted by David Krulac
Posted by David Krulac on August 26, 2003 at 14:41:07:
IMHO
lying on the loan documents in almost all cases is fraud under federal law. It would not be a federal offense if the loan came from a bank not NA, not federally insured and not with offices in more than one state. But it would still be a state crime in most states.
imho, its not worth the fine and possible jail time.
Re: First Rental home - need opinions - Posted by Peter_MD
Posted by Peter_MD on August 26, 2003 at 06:56:54:
DanPA:
If you are going to do something blatantly illegal, I suggest you don’t post it on a discussion board … not too smart in my personal opinion.
The answer will probably be that the least amount down will be better especially if it cash flows…I know you said it would be less each month, however, if you can get a positive cash flow (in addition to keeping the place maintained properly), the least amount down will provide you with a nest egg to have in case you need a new roof, new furnace, new wiring or plumbing, etc.
Now, you asked the question, but I really think the answer has been provided many times and you should search the archives for some solid responses.
…and you will find responses about defrauding the lender (and the insurance company) by falsely claiming that the property will be owner occupied. Think quickly: What happens if the place catches on fire because of a faulty electical system or is broken into? How will you explain to the police, lender, insurance company, etc. that YOU WEREN’T HOME AT THE TIME?
To be owner occupied, you have to get a new drivers license with THAT ADDRESS ON IT. Register with the Post Office to receive mail at that location, etc.
Think long and hard before you do something that will jeopardize you and your family and put you in a position that will ruin any chances of succeeding in real estate.
BTW, this is what Roscoe Edgar (former IRS Commissioner) meant by “the pigs are cute but the hogs get slaughtered”. If you do it now (saying this is owner occupied to the lender and insurance company), when will it stop? You can stop it now by being honest and getting an investor loan and notifying the insurance company that this will be an investment property.
Don’t worry, I sleep well at night because I don’t have to look behind me all the time and worry that anything I might have done in the past will come back to get me …
Good luck to you, and do the right thing …