Ok, I have bad credit that is 1 year post bk7 discharge, i live in california, and cannot afford the housing, id rather rent. However I am from a town in New York where all of my family lives where the housing is dirt cheap!!! Im talking duplexes in great shape either currently occupied or ready to rent for 65k - 90K here is my plan. I have been approved on a loan of 100% financing to buy at 70k, seller pays 6% concessions, earnest money is almost a non factor if i have the financing i need no money down. the 6% will cover all closing costs, I only need to come up with appraisal fee. My loan is high 80-20 interest rate a 30 year at almost 9% and a 11% second. The rents are about 550 each, taxes 3000.00 per year and mortgage at aprox 600.00 a month gives me a positive cash flow. I am saying that its owner occupied so i can get 100% financed and it wont be. I plan to stay in California, however i need to start somewhere, I would like to use this deal for a future stepping stone to other properties. 1. is this a stupid investment. 2. can i get in trouble for no owner occupancy. I hear people do this all the time and get away with it. I just need one first deal to get me rolling. Please help me with some advise.

i would say its a stupid investment since you are risking mortgage fraud by falsifying your real intentions.
think about it, yes alot of investors do these all the time and get away with it, but all that needs to happen is for an investor to get caught just once and pay the consequences.

why dont you keep it legit by doing a non owner occupied(NOO) and pay the extra interest rate on your 1st and 2nd. this will surely keep you out of jail. since youre going to be dealing with a duplex, it is your responsibility to understand the property's CAP rate, net operating income(NOI), gross rents, gross rent income(GRI), cash on cash analysis, return of investment(ROI), miscellaneous expenses, debt service, etc. although this might be an overkill for a 2 unit property but at least you have some factors to fulfill whether this property will be an asset or a big liability.

aside from crunching the numbers, youre going to need to understand your vacancy factors, local market conditions, general market conditions, credit liabilites of your tenants, title condition, maintenance, property management, and alot more i can mention off topic.

1. Do the homework
2. Do the work
3. Do the due diligence
4. Pay your dues
5. Do what you want to do.

i strongly suggest you either partner up with someone who has the experience and knowledge or educate yourself some more before diving in. dont be a motivated buyer unless you want to become a motivated seller and have a pro investor buy you out at a discount for your mistakes

by the way, im talking to the admin to get a commercial forum up and running. although im new in the commercial game, ill be posting my research and a bunch of questions for all of us to learn and utilize.

Thanks for replying.....With a NOO can i still do this with 0.00 down id be happy to pay the interest on a NOO, however i dont have the 15% down stroke that a lender would be looking for. on rental property they are at 85% LTV .

im not sure if you can do 0 down on a NOO loan. maybe one of the loan officers on this forum can help you out with that. ive heard that you can put 5-10% down with NOO loans.

you can try to be creative by taking a conventional 80% LTV and have the seller carry back 20%.

There are 100 percent investor loans out there and they just came out a few months back.

With 1 year out of bankruptcy you will not qualify for one,the program you usually have to have 3 to 6 months of reserves in ira or 401k or bank account,a credit score of 700 or better,and no bankruptcies or foreclosures,judgements or repossesions.They also have 90 and 95 percent loans out there.

You are new to this game and lenders are not and they have heard all the schemes out there.
Just because someone does something illegal doesn't make it right,at the end of the day you only answer to yourself and i hope you would be of a better character than to do illegal activity for the love of money.If you do enough of these illegal deals the lenders will send your info to the government and will put you on there blacklist and notify other lenders int he community.

If you don't do anything wrong you don't have to remember anything.

Go to www.reiclub.com they have free audios,downloadable books and tons of info.

If you have little money become a bird dog,start up is nothing and you just invest your time,put the deals together and collect your fee.
Generally you want to build up reserves with flips before you start holding rental properties for cash flow,the reason is everything has upturns and downturns and you want to have the reserves when you need them so you won't lose the properties.

Don't even try the owner occupied thing,you will sign a document stating at closing that you are to occupy the home.If you falsify this you will be committing mortgage fraud,you will be caught and hud is actually putting people in prison for up to five years and up to a 250k fine,please don't be stupid put in your time and legitamtely you can make it.

good luck

If you can operate as a bird dog and use other people's money,why not? You would have to prove the deal is profitable to be able to flip the contract. Be carefull you don't get caught at acting as an agent without a license though. Your intentions must be disclosed or you could be accused of fraud, especially if someone takes a loss because of your actions.

again i appreciate all that have given me input I am soaking up all this infomration. Someone mentioned HUD is cracking down on people that do this. Im not talking about doing this as an ongoing thing. I was thinking of it as a one time thing. Its not a HUD home that I would be buying. What I cant understand is this; I hear if the LENDER finds out that Ive done this , that the loan can be called due. I would also be in trouble for lying. However the LENDER is the one telling me I could squeek through on this. Im direct with the lender theres no middle man or broker. I just dont know what do with this. I could pull the trigger and close in 15- 30 days on a property that allready has long standing tennants that dont want to move, in a property that is in Excellent shape. Im so torn here. I mean im from this area originally and all my family is there, its not like i couldnt say i would be moving there, whats to say that I didnt have an issue making my tennants leave. Whats to say I dont go ahead and turn utilities on in my name and just tell the tennants that the utilities would be included and raise the rent accordingly. OK I know I must sound like i have a head full of rocks, but damnit I just want my first deal after that everything would be gravy. I have alot of thinking to do. Thats for sure.

You have lenders that do illegal activities everyday too,you can play with fire it's your choice and you just might get burned.Lenders lose the liscense everyday for inappropriate activity.I hear what you are saying but i would advise to partner with an investor willing to put up the cash and split it 50/50,this way you can get started and on your feet.Go to your local investor association and meet some contacts,but i wouldn't mention the property you have in question unless you had a signed legal statement from your partner agreeing to split 50/50.

good luck

your loan officer sounds like a slime ball, that he would volunteer you for jail time.

i wonder if the underwriters are in on it to? the reason i say this is if you live in cali and you're buying a "primary residence" in ny, this should have automatically thrown up a red flag to the underwriters. mannnnnn, if your loan file were to ever get audited, you'd be easy prey - commuting from cali to ny for work sure would be tough to explain.

the truth of the matter is, when you deal with a subprime lender, they sometimes take certain liberties that they shouldn't, which can get the borrower in trouble. i wouldn't risk it.

look for another lender, or another way to finance the deal, or wait until your credit is better so you can have more lending options.

just to clarify a point i made in my previous post....there are even slime balls in the A credit lending arena as well. but on a % basis, seems to be less so than on the subprime side, where they sometimes are not as regulated.