Real estate investors that have been around for a few years have discovered a way to get into single family homes with very little down and ultimately turn them into rental properties. That process provides investors with move up money each time a property is sold or even keeping the real estate for buying and flippingrental income and repeating the process yet again in the future. Can this be done?

Yes it can. But there are some things to look out for. First, understand that lenders evaluate a loan application as the application stands in its current condition. You may finance a property as your primary residence, live in it then later on move. Does the lender then contact you and make you change your note from a primary residence to an investment property? No. The original loan was made as a primary residence, it made sense to the lender and the loan was approved. The borrower then gets the double advantage of a lower down payment requirement and a lower rate compared to investment property loans. But there are limits.

If the loan is issued as a primary residence then the borrower moves and rents out the property in 90 days, the lender may have the right to call in the loan. Certain loan provisions require the borrower to occupy the property for at least one year and while there’s always some wiggle room for that, if there’s a quick move the lender may try and prove the application was not made in good faith. Yet if you have long term plans of moving at some point in the future just not right away, you can follow this process.

At the next property you finance, the lender will ask if you’re going to dispose of your current property. If you say “no” the lender will review how long you’ve had the home and if the lender gets a feeling that you’re going to be a short termer just like the previous home, the lender may not be convinced of your intentions and underwrite the loan as an investor property. This almost always happens when a borrower “moves down” to a smaller property while keeping the original one. But as long as your intentions are pure with no plans of a quick “flip” then there’s little reason to be concerned.