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Healer_noelle, Home Buyer in Carlsbad, CA

Renting out recently purchased new home with FHA loan

Asked by Healer_noelle, Carlsbad, CA Sun Sep 8, 2013

I recently purchased a new-build home with an FHA loan with the intent to move from CA to CO for work. After closing, I had some personal circumstances change so I need to move to AZ instead of CO (I need to be in closer proximity to CA). I tried to list and sell my house at a price where I would just about break even and I've had very few showings and no offers. I know that under FHA I have to live in it for a year before renting it out unless there are extenuating circumstances but I cannot find a definition as to what those may be. i'm not trying to buy another home and really just want to make this situation workable. Even renting it out I would be renting it at a loss-this I not at all about making money, but rather trying to make good on this financial commitment. Can anyone give me any suggestions on what to do? Thank you!

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9
Healer_noelle,

You need to check with a good real estate attorney, then inform your lender. I would not jus rent it and assume you have the extenuating circumstances necessary for an exemption of the 1 year rule. FHA does review this situation and you could inadvertantly be facing a federal crime with serious penalties and possible jail time. It is a gamble not worth taking.

Robert McGuire
Broker/Consultant
Your Castle Real Estate
http://about.me/robertmcguire33
0 votes Thank Flag Link Sat Sep 14, 2013
Call Leon Cisneros @ CRE Investment Financing
720-271-2085
creinvestmentfinancing@gmail.com
Tell him Frank Lynch recommended him.
0 votes Thank Flag Link Fri Sep 13, 2013
What you are referring to is very common. House is bought with low down loan, then made into a rental. While consulting an attorney and informing your mortgage holder could be good avenues, imho the vast majority of owners in this situation just rent the house and that's that. I would though caution you that it is in your best interests to get a good property management firm. Renting a new house, from afar, can be a recipe for disaster. Rough tenants or someone that moves in and then decides not to pay the rent could be terrible. Also, you probably are entitled to a punch list on construction items. So you need a tenant that will work with you on this. Finally, this house is BRAND new. 99% of rentals are not. So, you should be able to secure a two to five year lease with significant deposit. This house will only be brand new once and the fortunate renter will be one that is going to get to live in their own private brand new house - that is special.
0 votes Thank Flag Link Mon Sep 9, 2013
@Tim Klein-I needed to relocate for a new job and chose CO. Some personal circumstances have changed with my family and now I really need to be based out if AZ so I have easier access to CA to get back to my family (I had a choice between the two states). CO is too far to drive whereas AZ is a much closer drive.
0 votes Thank Flag Link Mon Sep 9, 2013
Ok. Note that this is not legal advice, but I believe this is one of the acceptable exceptions. Good luck!
Flag Mon Sep 9, 2013
Thank you! This is quite helpful. I have reached out to an attorney and will go from there.
0 votes Thank Flag Link Sun Sep 8, 2013
You should definitely be prepared to talk with an attorney. but also try talking to the person who arranged your mortgage. To qualify for the lower down-payment owner occupant loan, there was something you had to sign indicating your intent to make the property your primary residence for at least a year. The operative word is "intent". While they'll be concerned whether you're trying to take advantage of the system. with the proper explanation of your change in circumstances hopefully you can show that your intention was in fact sincere.
0 votes Thank Flag Link Sun Sep 8, 2013
Was it a change of employment or a job transfer or relocation necessitated by your employer?
0 votes Thank Flag Link Sun Sep 8, 2013
I have rented new homes to new home buyers for great profit.

Then when the community is built sell it and exchange it for another new one.

Alisa
0 votes Thank Flag Link Sun Sep 8, 2013
Consult a real estate attorney about how to document your circumstances, but I had someone in a very similar situation (and it was only a 45-mile issue, not multiple states issue) & our person worked it out fine. She made notice to her lender via her attorney, informed her insurance company & all was fine for her. It's been 4 years & has had no issue. Just be sure to have a legal counsel direct you to document it properly. Best, Nicci Hyatt
0 votes Thank Flag Link Sun Sep 8, 2013
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