{"id":145545,"date":"2022-11-11T11:12:24","date_gmt":"2022-11-11T18:12:24","guid":{"rendered":"https:\/\/www.biggerpockets.com\/blog\/?p=145545"},"modified":"2024-02-24T12:12:41","modified_gmt":"2024-02-24T19:12:41","slug":"veterans-loan-access","status":"publish","type":"post","link":"https:\/\/www.biggerpockets.com\/blog\/veterans-loan-access","title":{"rendered":"Veterans: Do You Know Where You Can Access Exclusive Funding?"},"content":{"rendered":"\n\n      <iframe loading=\"lazy\" frameborder=\"0\" height=\"200\" scrolling=\"no\" src=\"https:\/\/playlist.megaphone.fm?e=BIGPOC3250095940&#038;light=false\" width=\"100%\"><\/iframe>  \n\n\n\n\n<p class=\"wp-block-paragraph\"><span data-preserver-spaces=\"true\">The American Dream was largely about home ownership. The new American Dream is about personal freedom and flexibility. This ideal is available to every American. However, those most deserving of this are veterans.<\/span><\/p>\n\n\n\n<p class=\"wp-block-paragraph\"><span data-preserver-spaces=\"true\">I bought my first hotel as a cadet at West Point. The exercise of owning real estate delivers freedom and flexibility. I also believe real estate ownership produces a better service member who can assess risk more effectively.<\/span><\/p>\n\n\n\n<p class=\"wp-block-paragraph\"><span data-preserver-spaces=\"true\">This Veterans Day, I encourage you to think about where your life is headed and how you are building wealth. For most of us who aren\u2019t coding or involved in the tech industry, real estate remains the most reliable way to build steady wealth.<\/span><\/p>\n\n\n\n<p class=\"wp-block-paragraph\"><span data-preserver-spaces=\"true\">Building this wealth requires patience and a gradual \u201ccrawl, walk, and run\u201d approach to gaining experience and compounding wealth. As you probably know, real estate is a capital-intensive business involving a combination of both debt and equity.<\/span><\/p>\n\n\n\n<p class=\"wp-block-paragraph\"><span data-preserver-spaces=\"true\">Fortunately, lining up the financing as a veteran or military service member presents you with very unique advantages that a lot of people do not get to utilize.<\/span><\/p>\n\n\n\n<h2 class=\"wp-block-heading\"><span data-preserver-spaces=\"true\">Crawl: House Hacking With a VA Loan<\/span><\/h2>\n\n\n\n<p class=\"wp-block-paragraph\"><span data-preserver-spaces=\"true\">With&nbsp;<\/span><a class=\"editor-rtfLink\" href=\"https:\/\/www.biggerpockets.com\/real-estate-investing\/house-hacking-strategy\" target=\"_blank\" rel=\"noopener\"><span data-preserver-spaces=\"true\">house hacking<\/span><\/a><span data-preserver-spaces=\"true\">, you can acquire a property with 0% down using a&nbsp;<\/span><a class=\"editor-rtfLink\" href=\"https:\/\/www.biggerpockets.com\/blog\/va-home-loan\" target=\"_blank\" rel=\"noopener\"><span data-preserver-spaces=\"true\">VA loan<\/span><\/a><span data-preserver-spaces=\"true\">. You then proceed to rent out either rooms to tenants or buy a duplex where you live in one unit and rent out the other. The end result is that you have your mortgage paid by someone else.<\/span><\/p>\n\n\n\n<p class=\"wp-block-paragraph\"><span data-preserver-spaces=\"true\">The other aspect of this is that you start to learn how to manage tenants (in all their glory) and what they want in a rental property. This will serve you later as you expand your portfolio.<\/span><\/p>\n\n\n\n<h2 class=\"wp-block-heading\"><span data-preserver-spaces=\"true\">Walk: Obtain Your First Rental<\/span><\/h2>\n\n\n\n<p class=\"wp-block-paragraph\"><span data-preserver-spaces=\"true\">Now that you are free of paying a mortgage (because your tenants are paying it), you can now start saving $1,000-$2,000 per month. After about 6-12 months, you\u2019ll have hopefully saved up enough cash for a down payment on your first rental property.<\/span><\/p>\n\n\n\n<p class=\"wp-block-paragraph\"><span data-preserver-spaces=\"true\">In terms of financing, there are a few options such as&nbsp;<\/span><a class=\"editor-rtfLink\" href=\"https:\/\/www.investopedia.com\/terms\/d\/dscr.asp\" target=\"_blank\" rel=\"noopener\"><span data-preserver-spaces=\"true\">DSCR<\/span><\/a><span data-preserver-spaces=\"true\">, or debt service coverage ratio, which means the rent covers the mortgage payment) or a rental loan from a bank, credit union, or even private lender. While DSCR lenders or loans may not care as much about your income, banks and credit unions will care deeply about it, and having a military income is an excellent signal to a lender that you are a good credit risk. This also means you could get a lower interest rate.<\/span><\/p>\n\n\n\n<p class=\"wp-block-paragraph\"><span data-preserver-spaces=\"true\">The key aspect of this type of financing is making sure that the rent you can charge from the property covers the debt payments plus the other costs such as insurance, taxes, and repairs.<\/span><\/p>\n\n\n\n<h2 class=\"wp-block-heading\"><span data-preserver-spaces=\"true\">Run: Flip Or BRRRR Properties<\/span><\/h2>\n\n\n\n<p class=\"wp-block-paragraph\"><span data-preserver-spaces=\"true\">The most fun part of real estate is when you can start doubling or tripling your money in a short period of time. This is also fraught with the most risk. Having a few rental properties under your belt will give you a sense of the value you can potentially deliver on a fix\/flip project.<\/span><\/p>\n\n\n\n<p class=\"wp-block-paragraph\"><span data-preserver-spaces=\"true\">I recommend focusing on particular areas, such as the local area around a military base since they traditionally have a high demand for housing. Military bases, in particular, experience a lot of \u201cchurn,\u201d or cycling of people in and out of the area. That dynamic creates a high velocity of deals and supports the demand for real estate. Also, military bases are often in areas that are older, which results in many properties in need of serious repair.<\/span><\/p>\n\n\n\n<p class=\"wp-block-paragraph\"><span data-preserver-spaces=\"true\">If you can find properties in need of major repairs or rehab work, then flipping or the&nbsp;<\/span><a class=\"editor-rtfLink\" href=\"https:\/\/www.biggerpockets.com\/guides\/brrrr-method\" target=\"_blank\" rel=\"noopener\"><span data-preserver-spaces=\"true\">BRRRR strategy<\/span><\/a><span data-preserver-spaces=\"true\">&nbsp;is an excellent way to build wealth relatively quickly. The important thing is that you find the property undervalued enough to justify the rehab and other risks involved. My personal rule of thumb is that you should be able to create at least 30% or more value with this strategy. Meaning if you bought it for $100K and put $20K into repairing or updating the property, then the asset needs to be worth $156K.<\/span><\/p>\n\n\n\n<p class=\"wp-block-paragraph\"><span data-preserver-spaces=\"true\">Trust me, with there being so many things that could go wrong during a flip, you want a healthy margin of safety in case an unexpected mistake arises.<\/span><\/p>\n\n\n\n<p class=\"wp-block-paragraph\"><span data-preserver-spaces=\"true\">All this being said, there are few traditional or conventional lenders that will lend on these types of projects. The next best option is a private lender or a hard money lender. These lenders come in all shapes and sizes, and criteria.<\/span><\/p>\n\n\n\n<p class=\"wp-block-paragraph\"><span data-preserver-spaces=\"true\">These lenders offer a lot of flexibility. For example, my firm, Trophy Point, offers a 100% Loan-to-Cost option (100% of purchase and 100% of rehab work) only to military-affiliated borrowers as long as the total project cost is 70% or lower of the final&nbsp;<\/span><a class=\"editor-rtfLink\" href=\"https:\/\/www.biggerpockets.com\/glossary\/after-repair-value-arv\" target=\"_blank\" rel=\"noopener\"><span data-preserver-spaces=\"true\">after-repair value<\/span><\/a><span data-preserver-spaces=\"true\">. However, you do pay for this flexibility in the form of higher interest. Most terms are interest only, which is good when you are in the middle of a project.<\/span><\/p>\n\n\n\n<p class=\"wp-block-paragraph\"><span data-preserver-spaces=\"true\">The good news is that if you have been successful in the previous stages, you should have sufficient cash flow to cover the monthly interest stemming from a private loan while you perform your rehab work. It also helps immensely to have income from the military, where you are less likely to be fired and lose your paycheck within a week as our civilian counterparts are subject to.<\/span><\/p>\n\n\n\n<p class=\"wp-block-paragraph\"><span data-preserver-spaces=\"true\">A note of caution: there are additional risks in borrowing from a private entity. They are typically unregulated, and there are shady characters out there. Do not pay a large \u201cdeposit\u201d to lock in a loan. Also, be sure to distinguish between a \u201cbroker\u201d who just connects you to a lender but does not have their own balance sheet or fund. Some brokers would make the argument that they can get you a better rate, and that might be true. The question to ask is what their track record is and what they stand to earn as a fee on your loan.<\/span><\/p>\n\n\n\n<p class=\"wp-block-paragraph\"><span data-preserver-spaces=\"true\">In my opinion, it\u2019s best to deal directly with a lender that has its own fund. I have found that the conversations are easier to have and even less expensive (partly because there is no broker fee to pay with the loan).<\/span><\/p>\n\n\n\n<p class=\"wp-block-paragraph\"><span data-preserver-spaces=\"true\">Once you fix up the property, you have two options, you can sell it off for a major profit, or you can put in a renter and use bank financing to refinance out of our private loan. In most cases, you\u2019ll be able to pay your private lender off completely, thus being left with a \u201cfree house\u201d where you had little to no direct investment of your own capital!<\/span><\/p>\n\n\n\n<p class=\"wp-block-paragraph\"><span data-preserver-spaces=\"true\">Through my ownership at Trophy Point, I have gotten to know dozens of military-affiliated folks that acquire\/flip\/rent 30+ properties within 4-5 years. I know because we\u2019ve funded $50 million and 255 of these types of loans. My final piece of advice is that if you can find a good deal, you\u2019ll be able to line up the financing.<\/span><\/p>\n\n\n\n<h2 class=\"wp-block-heading\"><span data-preserver-spaces=\"true\">Conclusion<\/span><\/h2>\n\n\n\n<p class=\"wp-block-paragraph\"><span data-preserver-spaces=\"true\">The real estate world is wide and full of opportunities. As a veteran or military person, you have unique advantages in acquiring real estate in a relatively short amount of time. You deserve the opportunity to build wealth and enjoy the same fruits of financial freedom as the rest of the American population.<\/span><\/p>\n\n\n\n    \n  <div id=\"visibility-group-block_cdb572f8f93e6c9c0292e347a32aee03\" class=\"visibility-group  hidden\">\n        \n\n<div id=\"hero-block_f9cb4e30c34a7a65f01382a5e0adbdd4\" class=\"first:mt-0 hero-block py-4  alignwide   has-background has-theme-gold-light-background-color has-text-color has-theme-gold-color\">\n    <div\n        class=\" flex flex-wrap lg:flex-nowrap max-w-screen-xl mx-auto px-4 relative lg:items-center \">\n\n        <div class=\"relative z-30 w-full \">\n            <main class=\"py-4\">\n                \n\n<p class=\"has-theme-gold-color has-text-color has-large-font-size wp-block-paragraph\" style=\"font-style:normal;font-weight:800\">Get the Best Loan Today<\/p>\n\n\n\n<p class=\"my-3 md:my-5 lg:my-8 has-slate-900-color has-text-color wp-block-paragraph\" style=\"font-size:16px\">Find trusted, <em><strong>investor-friendly<\/strong><\/em> lenders who specialize in your strategy. <\/p>\n\n\n\n<p class=\"wp-block-paragraph\"><\/p>\n\n\n\n<div id=button-custom-event-block_c31e78d023d6aabed9e88772397cc0fe class='button-custom-event'>\n      <a href=\"https:\/\/www.biggerpockets.com\/business\/finder\/lenders\" x-on:click=\"window.analytics.track(&#039;Blog Block | B2C Marketplace Lender Finder&#039;, {\n      referrer: &#039;https:\/\/www.biggerpockets.com\/blog\/veterans-loan-access&#039;,\n    });\" class=\" btn-shape inline-block no-underline has-background has-theme-gold-background-color has-text-color has-white-color\" target=\"_blank\">Find a Lender<\/a>\n  <\/div>\n\n            <\/main>\n        <\/div>\n\n                <div class=\" first:mt-0 relative h-full lg:flex lg:items-center\">\n            <img decoding=\"async\" class=\"object-cover w-full relative z-20 my-0  rounded-md hidden lg:block\" src=\"https:\/\/www.biggerpockets.com\/blog\/wp-content\/uploads\/2022\/08\/Marketplace-Blog-Blocks-Lender-v3.png\" alt=\"investor friendly lender, investor friendly real estate loans\" title=\"\">\n        <\/div>\n            <\/div>\n<\/div>\n\n  <\/div>\n  \n\n\n<div class=\"wp-block-group\"><div class=\"wp-block-group__inner-container is-layout-constrained wp-block-group-is-layout-constrained\">\n    \n  <div id=\"visibility-group-block_64dd31c79f00f\" class=\"visibility-group  \">\n        \n\n<div style=\"height:10px\" aria-hidden=\"true\" class=\"wp-block-spacer\"><\/div>\n\n\n\n<div id=\"hero-block_64dd2875dba9d\" class=\"first:mt-0 hero-block py-4    has-background has-slate-100-background-color has-text-color has-theme-slate-color\">\n    <div\n        class=\" flex flex-wrap lg:flex-nowrap max-w-screen-xl mx-auto px-4 relative lg:items-center \">\n\n        <div class=\"relative z-30 w-full \">\n            <main class=\"py-4\">\n                \n\n<h3 class=\"wp-block-heading my-0 tracking-tight font-extrabold has-theme-slate-dark-color has-text-color has-large-font-size\">Join the community<\/h3>\n\n\n\n<p class=\"my-3 md:my-5 lg:my-8 has-theme-slate-color has-text-color wp-block-paragraph\" style=\"font-size:16px;font-style:normal;font-weight:400\">Ready to succeed in real estate investing? Create a free BiggerPockets account to learn about investment strategies; ask questions and get answers from our community of +2 million members; connect with investor-friendly agents; and so much more. <\/p>\n\n\n\n<div id=button-custom-event-block_64dd2888dba9e class='button-custom-event'>\n      <a href=\"https:\/\/www.biggerpockets.com\/signup\" x-on:click=\"window.analytics.track(&#039;Blog Block | Acquisition | Free Membership Signup&#039;, {\n      referrer: &#039;https:\/\/www.biggerpockets.com\/blog\/veterans-loan-access&#039;,\n    });\" class=\" btn-shape inline-block no-underline has-background has-theme-blue-background-color has-text-color has-white-color\" target=\"_blank\">Sign Up<\/a>\n  <\/div>\n\n            <\/main>\n        <\/div>\n\n            <\/div>\n<\/div>\n\n\n<div style=\"height:10px\" aria-hidden=\"true\" class=\"wp-block-spacer\"><\/div>\n\n\n  <\/div>\n  <\/div><\/div>\n","protected":false},"excerpt":{"rendered":"<p>The American Dream was largely about home ownership. The new American Dream is about personal freedom and flexibility. This ideal is available to every American. However, those most deserving of [&hellip;]<\/p>\n","protected":false},"author":613632,"featured_media":145546,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"_acf_changed":false,"footnotes":""},"categories":[7119,7402],"tags":[],"class_list":["post-145545","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-biggerpockets-daily","category-traditional-loans"],"acf":[],"comment_count":0,"_links":{"self":[{"href":"https:\/\/www.biggerpockets.com\/blog\/wp-json\/wp\/v2\/posts\/145545","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/www.biggerpockets.com\/blog\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/www.biggerpockets.com\/blog\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/www.biggerpockets.com\/blog\/wp-json\/wp\/v2\/users\/613632"}],"replies":[{"embeddable":true,"href":"https:\/\/www.biggerpockets.com\/blog\/wp-json\/wp\/v2\/comments?post=145545"}],"version-history":[{"count":0,"href":"https:\/\/www.biggerpockets.com\/blog\/wp-json\/wp\/v2\/posts\/145545\/revisions"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/www.biggerpockets.com\/blog\/wp-json\/wp\/v2\/media\/145546"}],"wp:attachment":[{"href":"https:\/\/www.biggerpockets.com\/blog\/wp-json\/wp\/v2\/media?parent=145545"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/www.biggerpockets.com\/blog\/wp-json\/wp\/v2\/categories?post=145545"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/www.biggerpockets.com\/blog\/wp-json\/wp\/v2\/tags?post=145545"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}