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Owner occupied vs. rental property

I have a rental agreement with 9 more months on the lease.   I'm planning on getting a mortgage as owner occupied property.

I'm actively searching for a place to purchase (& live in) once my lease is up.    I'm not sure what the closing time is...but if it closes really quickly, I would like to rent out the property for a few months before I move in.

Any recommendations on what I should do here?   Should I get quotes for both?  Should I assume that closing period is going to take several months and that I'm unlikely to get a tenant for a few months (something I may be okay with)? 
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July 20 2013 - Seattle
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Answers (10)

If you have never been a landlord I would not recommend renting out your home. There is a lot to owning an investment property and if for some reason your short term tenant decided to become a long term tenant and not pay you rent, you could be in for a very large headache. This could get very expensive and could also be very time consuming. Been there done it and let me tell you, it is not fun. 

I would listen to Doug. 

Good luck 

Gordon 
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July 24 2013

Doug has the right idea.  Interest rates and down payment requirements are  different on an owner occupied property than on an investment property. If your intention is to live in the property, you should certainly get an owner-occupied mortgage.  Talk to your landlord, you may be able to come to an arrangement. 

If you're looking for a low down payment loan, we are one of the only lenders who offer an 80/20 purchase program.  That means no down payment. And we are a local Seattle lender.  Contact me through my profile if you'd like to discuss.

Hope this helps. 

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July 24 2013
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Talk to your landlord. I have 14 rentals, and if a tenant in your shoes offered me one months rent as a lease break fee, I'd take it and never think twice. 
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July 21 2013
Down payment requirements and interest rates are vastly different between an owner occupied property and a rental property. Best bet might be to find someone who wants to move in to your apartment, maybe your landlord will not charge you for breaking rent since you did the work t=for them in finding another tenant to take your place.

Once you get an accepted offer on a property you can expect to close within 30-45 days.

Otherwise you are probably better off buying an owner occupied property and breaking your lease.

If you need to get pre-qualified or look over options please feel free to click on my profile and shoot me an email.

Best of luck,

Doug
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July 21 2013
If you break your lease your landlord is required to place the property on the market and make every effort to rent it for the same terms that you have in the lease.  Don't you think rents have risen?  Don't you think rental vacancies are low?  I wouldn't factor too much into breaking the lease, you might lose a month's rent but it shouldn't be more than that.
Describing a property to a lender as a primary residence and not using it as such is fraud, so that isn't a particularly good idea.
Every condominium association also has a different view on rentals and hardly any of them allow short term rentals.  There's usually a cap on the number of rentals (long term) and that ranges from 20-49%.  Purchasing a condo as an investment (for a rental) is not particularly straight forward.
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July 21 2013
In the summer time there is a market for short term rentals...you might be able to get some one to rent for 2 or 3 months
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July 20 2013
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That answers my question quite well.  Depending on the interest rate difference, I'll either call it what it is...or break my lease.
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July 20 2013
Profile picture for wetdawgs
Usually it must be your primary residence for at least 12 months before renting it out.  Please talk with  your lender for specifics.   Calling it your primary residence for mortgage purposes but then renting it is mortgage fraud (yikes!!), therefore, it is very important that you know the specifics.

Why not see what the escape costs are for your lease?
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July 20 2013
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How long would I have to stay in the place after closing?  Could I stay there for 1 month to suffice that requirement (while still maintaining my existing lease)?
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July 20 2013
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If you get a mortgage for owner occupied property, the time frame until you must take residence will be clearly described.   It may be 60 days or less.   Therefore, be very very careful!

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July 20 2013
 
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