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03-24-2024, 03:31 PM
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Can you buy an investment property with 5% down?

Was shopping around for a single family home in Texas and wasn't aware that investment properties require 25% down.

I mentioned to the agent that I might live there for a year to which he replied that he could do a primary home mortgage (lower interest rate + 5% down), but what happens if I do that then change my mind and just rent it out? Isn't that mortgage fraud?
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03-24-2024, 03:32 PM
#2
Yes, that would be mortgage fraud. But plenty of people do it (srs)
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03-24-2024, 03:46 PM
#3
Why would you want to buy an investment property with 5% down?

The ideal way is to buy them 0% down.

srs

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03-24-2024, 03:47 PM
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Maybe if they do seller financing.
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03-24-2024, 03:56 PM
#5
Originally Posted By Anachron⏩
Why would you want to buy an investment property with 5% down?

The ideal way is to buy them 0% down.

srs

This.
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03-24-2024, 03:58 PM
#6
would be negative cashflow asf.
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03-24-2024, 03:58 PM
#7
Yeah if you live in it for two years first
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03-24-2024, 03:59 PM
#8
Originally Posted By TugOfPeace⏩
Was shopping around for a single family home in Texas and wasn't aware that investment properties require 25% down.

I mentioned to the agent that I might live there for a year to which he replied that he could do a primary home mortgage (lower interest rate + 5% down), but what happens if I do that then change my mind and just rent it out? Isn't that mortgage fraud?
It's an FHA 203b your realtor suggested. That would work, but you have to live there for a year and then can rent it out. Also, as Oliver said, you could do owner financing.

A lot of people have very low first mortgage rates, so you will see assumptions moving forward. One option would be buy the property for the mortgage amount and have the seller hold a 2nd mortgage for the seller's profit, put the property in a land trust and have the beneficial ownership signed over to you. The mortgage servicer allows you to put a property in a trust without triggering the due-on-sale clause and you as the new owner is not public record.
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03-24-2024, 04:13 PM
#9
Originally Posted By Anachron⏩
Why would you want to buy an investment property with 5% down?

The ideal way is to buy them 0% down.

srs

How do you do that? (Other than a VA loan, which is only for owner occupied housing)
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03-24-2024, 04:16 PM
#10
Originally Posted By JackyChin⏩
How do you do that? (Other than a VA loan, which is only for owner occupied housing)
Most common would be a second charge secured against the same property.

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03-24-2024, 04:23 PM
#11
Originally Posted By Anachron⏩
Most common would be a second charge secured against the same property.

How do you accomplish this in practice?

It seems like you'd have to buy the property, then convince the second mortgage holder it's worth more than you just paid a week ago.

Or pay a super high interest rate since the second mortgage holder knows they'll be left holding the bag if anything goes wrong.
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03-24-2024, 04:27 PM
#12
Originally Posted By JackyChin⏩
How do you accomplish this in practice?

It seems like you'd have to buy the property, then convince the second mortgage holder it's worth more than you just paid a week ago.

Or pay a super high interest rate since the second mortgage holder knows they'll be left holding the bag if anything goes wrong.
You set up the second charge prior to finalizing the purchase, not afterwards - although in theory you could do it anytime between signing and closing date ( but you need to be able to close with cash down ).

Not super high interest rates either.

It helps to know lenders on a first name basis.

The property does have to appraise higher than what the purchase price is - but why would you purchase an investment property that isn't a good deal?

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03-24-2024, 04:29 PM
#13
Originally Posted By PaulJerome⏩
It's an FHA 203b your realtor suggested. That would work, but you have to live there for a year and then can rent it out. Also, as Oliver said, you could do owner financing.

A lot of people have very low first mortgage rates, so you will see assumptions moving forward. One option would be buy the property for the mortgage amount and have the seller hold a 2nd mortgage for the seller's profit, put the property in a land trust and have the beneficial ownership signed over to you. The mortgage servicer allows you to put a property in a trust without triggering the due-on-sale clause and you as the new owner is not public record.
Beyond FHA 203B I don't really know if it matters, this is a new construction home. I'm anticipating it's property value to rise once the neighborhood has completed it's construction.
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03-24-2024, 04:32 PM
#14
I know of someone doing mortgage fraud and I applaud it. Fuk those Jew bank rules. Do what's best for you. It's not morally wrong and you aren't hurting anyone. Again , **** those Jew bank rules and do it
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03-24-2024, 04:34 PM
#15
Originally Posted By PShift5⏩
I know of someone doing mortgage fraud and I applaud it. Fuk those Jew bank rules. Do what's best for you. It's not morally wrong and you aren't hurting anyone. Again , **** those Jew bank rules and do it
I am under the impression that it's a felony if you get caught…

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03-24-2024, 04:46 PM
#16
Originally Posted By Anachron⏩
I am under the impression that it's a felony if you get caught…

Don't get caught

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