Greenville, SC · Member since 2016 · 17 posts · 7 votes
Hi Everyone,
I have two options for my first house and am struggling on which one would be the better way to begin my investing.
Option 1
Use the VA loan, but I have to wait till July cause the underwriters want to see 6 months of consistent work history. This is because i took 5 months off after the military. My roommate moved out so i am currently paying 1800 a month on an apartment.
Option 2
Use a conventional loan with a co-signer and put 20% down. This would allow me to start building equity right away and not waste money on rent for the next 5 months.
I don't know if it is worth waiting 5 months and wasting all that money not building equity on an apartment. I also am a little fearful that the prices of houses are going to creep up in the next 5 months.
Investor · Bethlehem, PA · Member since 2016 · 929 posts · 951 votes
4y
@Peter Wellman On the surface there are so many different variables to consider such as: rent vs. buy, wait 6 months vs. act now, VA loan vs. conventional, buy primary residence vs. buy investment property, etc...
I think you can simplify this decision by removing all of those variables and making your decision based on one thing: can you find a good deal now?
If you find a good deal NOW then use whatever means necessary to buy it (e.g. conventional with a co-signer). If you can't find a good deal now then wait until you find one. If you're eligible for the VA loan at the time then use the VA loan.
If you use your VA loan in 6 months on a crappy deal, then you still have a crappy deal...
Realtor · Lima, OH · Member since 2019 · 22 posts · 15 votes
4y
Hey Peter,
Good questions! The first question that comes to my mind is - what is your investment goals/strategy? Are you looking to househack this property that you would purchase with a VA loan? Typically for a VA loan or any other government loan, they want to see that you are actually going to be living in the house.
Also, another idea, if you have the income capacity - could you buy the house now with 20% down and then possibly use your VA loan 6 months or 12 months down the road for a second investment property or househack?
I want to buy at least 1 property a year for the next 10 years. I'm looking to get mainly single-family homes with a couple multi family's and then eventually buy an apartment building. I do plan to live in the first house which i would look to house hack by renting out one of the rooms.
I think the problem with using a conventional loan first is that I wouldn't be able to use my VA loan until the year is up, which isn't a deal breaker for me but grabbing two houses in the next year would be ideal.
The problem I'm running into that I see is that I have liquid capital to invest but my work history and monthly income is holding me back a bit from diving in. I'm trying to maximize the initial investment to get the most out of it and create good momentum in my real estate portfolio
Flipper/Rehabber · Pittsburgh · Member since 2018 · 6k+ posts · 5k+ votes
4y
@Peter Wellman I've said this before and I'll say it again - I don't think renting in the short term is throwing money away. Waiting gives you time to research, learn, and save. And when your lease is up - no closing costs or points or finance charges. You just move out and move on. There will ALWAYS be deals even if prices continue to go up.
Well it looks like you have a plan moving forward. Seems like the VA loan would be a great tool if you are willing to wait. I'm with Nicholas - I don't think it will be a waste to rent for 4-5 more months until you can buy a home. Sometimes finding the right home or right deal can take a couple months anyway. If you are trying to accomplish your long term goal - then I don't see how waiting 4-5 extra months will inhibit you for future investments - especially when you will save a bunch of capital with not having a downpayment on a VA loan.
Investor · Bethlehem, PA · Member since 2016 · 929 posts · 951 votes
4y
@Peter Wellman On the surface there are so many different variables to consider such as: rent vs. buy, wait 6 months vs. act now, VA loan vs. conventional, buy primary residence vs. buy investment property, etc...
I think you can simplify this decision by removing all of those variables and making your decision based on one thing: can you find a good deal now?
If you find a good deal NOW then use whatever means necessary to buy it (e.g. conventional with a co-signer). If you can't find a good deal now then wait until you find one. If you're eligible for the VA loan at the time then use the VA loan.
If you use your VA loan in 6 months on a crappy deal, then you still have a crappy deal...
Greenville, SC · Member since 2016 · 17 posts · 7 votes
4y
Thank you guys. I appreciate all the insight! I agree with finding a good deal is key and in the long term goal 4-5 months won’t be a determine to my financial freedom in 10 year. Once again thank you!
I have two options for my first house and am struggling on which one would be the better way to begin my investing.
Option 1
Use the VA loan, but I have to wait till July cause the underwriters want to see 6 months of consistent work history. This is because i took 5 months off after the military. My roommate moved out so i am currently paying 1800 a month on an apartment.
Option 2
Use a conventional loan with a co-signer and put 20% down. This would allow me to start building equity right away and not waste money on rent for the next 5 months.
I don't know if it is worth waiting 5 months and wasting all that money not building equity on an apartment. I also am a little fearful that the prices of houses are going to creep up in the next 5 months.
I apricate any insight everyone can give me.
Aloha Peter. I'd say it honestly really depends on your financial goals. Personal opinion here. Interest rates are climbing and are supposed to do so more in the future. 5 months could change the interest rate quite a bit. I'm always in favor of leveraging your VA benefit as a veteran myself, however, as an investor too, might be a better move due to the market conditions to push early into conventional. Are you buying in SC or NC?
Rental Property Investor · Laurel, MD · Member since 2016 · 383 posts · 382 votes
4y
David has a point, interest rates are starting to climb up and in 5 months they could be higher. You may also want to consider an FHA loan, 3.5% down. Check the local county or town you might buy your home in, they maybe offering some type of down payment grants. Most will require you to live in the house for a number of years and than forgive the money.
Also, check out multiple banks. Just because one say's we need to see ...., doesn't mean another one will. Each bank has it's own criteria to follow and smaller more local banks may be more helpful.
Thank you for the input. I'm leaning a little more toward waiting till July to use my VA loan, however I did find an investor that I could go into a house with between know and then. I'm investing in the Greenville, sc area.
Rental Property Investor · New Haven, CT · Member since 2022 · 40 posts · 24 votes
4y
I agree with Jon Kelly, it's all about the opportunity. If you can find a good deal now, then jump on it! Don't worry too much about whether you can get the best mortgage possible. If the deal is good, it doesn't matter too much what kind of financing you get, and the VA loan will always be there for the next one. Even if you have to wait, don't focus too strictly on buying exactly within a year. It is great to have the deal a year goal, but if it winds up being every 13-14 months, you are still doing great. The plan is a guide, not a requirement for success, you will never be exactly on course with your plan
Rental Property Investor · Member since 2020 · 1k+ posts · 1k+ votes
4y
I would wait on the VA loan simply to avoid having to have a co-signer. If this deal goes south I wouldn't want to drag anyone down with me especially when it was my first deal.
@Peter Wellman I've said this before and I'll say it again - I don't think renting in the short term is throwing money away. Waiting gives you time to research, learn, and save. And when your lease is up - no closing costs or points or finance charges. You just move out and move on. There will ALWAYS be deals even if prices continue to go up.
Renting isn't always throwing away money in the long term, either. It really depends on lifestyle. Paula Pant wrote an excellent article about it: https://affordanything.com/is-...
Also, why do you have to put 20% down for a conventional loan if you're going to occupy?? That doesn't sound right.