Starting out with $30K to invest
New to Real Estate · Chicago, IL · Member since 2025 · 5 posts · 3 votes
Starting out with $30K to invest
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Jason WrayPro Member
Banker · Nationwide · Member since 2020 · 2k+ posts · 1k+ votesAnthony,
This is a very good question and there is multiple answers to this and each one can be as beneficial as the other. However, When you have access to a Military VA loan and you have not used your DD-214 and you have your full 100% entitlement, it's a No brainer. The best way to approach this would be to use your VA entitlement to buy a Multifamily 2-4 unit home.
Obviously the more units the merrier due to the logic of more doors more income for maximum long game and NOI. First you would buy a (4 unit) as an example one that needs a little TLC or could have a substantial increased ARV by doing some basic renovations/repairs. Then you live in it for 6 months and on the 6th month you apply for a VA to conventional refinance loan.
If you did your homework and the multifamily has been renovated it should have enough equity on the new ARV to refinance and convert to Fannie Mae or Freddie Mac and pull cash out. In some cases you can pull out enough cash to recoup the renovation funds and profit enough to use as a downpayment or more renovation funds on the next REI. If the equity or new ARV is not enough to pull cash out you can still go up to a 90% LTV and convert from VA to Fannie Mae investment program (Under a portfolio program) rate and term.
You can continue to use your VA after this transaction and have the full 100% entitlement so that you do not need to put any money down. This can be done several times but you do need to have the right team meaning seasoned Real estate agent, Seasoned Banker or Loan officer. This is where the agent can help identify the homes preferably 2-4 units and an idea of both common rents, Future ARV, and Max rents based on renovations/repairs.
As a Banker it's what we do on our side to map out the financing, future ARV to run the proposed refinance and to review ARV/LTV and rents to qualify even if you have to use DSCR as an example as a worse case back up. The main goal is making sure cash flow goals are met and also for the DSCR or typical DTI ratios in advance and that's fairly easy.
The good thing about sticking to 2-4 units other than more passive income due to more doors is being able to qualify for a more expensive home since you can use 75% of the other doors income to qualify which gets added to your current income!
FHA is great but it carries the MIP and UFMIP the MIP is for the life of the loan or until you refinance and VA does not have any PMI/MIP. Which is the monthly mortgage insurance that gets added to the payment, which does not benefit the owner it benefits the bank and also reduces cash flow. FHA also has the UFMIP which is painful since its 1.75% of the loan amount financed into the loan increasing the loan amount.
If you ever hit a point where you maximize your VA entitlement due to having (2) or more VA loans and cannot refinance. At that point you would switch to FHA and buy a primary going that route. So it's good to have it as a backup but VA Trumps FHA in most cases just do to the Zero down payment and No MIP/PMI.
VA and FHA also offer construction from the ground up which also covers the cost of the land/lot. They also offer renovation loans to renovate, add rooms or sqft, convert garage to bedroom, New roof, pools, etc. FHA offers the 203K and VA offers simple renovation but VA will offer 100% construction including cost or land/lot and FHA requires 3.5%.
If you ever have any questions feel free to reach out I have over 20 years' experience in both FHA & VA plus enjoy helping BP members and Veteran avoid lost time and money!
7 Replies
- 1yJason WrayPro MemberBanker · Nationwide · Member since 2020 · 2k+ posts · 1k+ votes
Anthony,
This is a very good question and there is multiple answers to this and each one can be as beneficial as the other. However, When you have access to a Military VA loan and you have not used your DD-214 and you have your full 100% entitlement, it's a No brainer. The best way to approach this would be to use your VA entitlement to buy a Multifamily 2-4 unit home.
Obviously the more units the merrier due to the logic of more doors more income for maximum long game and NOI. First you would buy a (4 unit) as an example one that needs a little TLC or could have a substantial increased ARV by doing some basic renovations/repairs. Then you live in it for 6 months and on the 6th month you apply for a VA to conventional refinance loan.
If you did your homework and the multifamily has been renovated it should have enough equity on the new ARV to refinance and convert to Fannie Mae or Freddie Mac and pull cash out. In some cases you can pull out enough cash to recoup the renovation funds and profit enough to use as a downpayment or more renovation funds on the next REI. If the equity or new ARV is not enough to pull cash out you can still go up to a 90% LTV and convert from VA to Fannie Mae investment program (Under a portfolio program) rate and term.
You can continue to use your VA after this transaction and have the full 100% entitlement so that you do not need to put any money down. This can be done several times but you do need to have the right team meaning seasoned Real estate agent, Seasoned Banker or Loan officer. This is where the agent can help identify the homes preferably 2-4 units and an idea of both common rents, Future ARV, and Max rents based on renovations/repairs.
As a Banker it's what we do on our side to map out the financing, future ARV to run the proposed refinance and to review ARV/LTV and rents to qualify even if you have to use DSCR as an example as a worse case back up. The main goal is making sure cash flow goals are met and also for the DSCR or typical DTI ratios in advance and that's fairly easy.
The good thing about sticking to 2-4 units other than more passive income due to more doors is being able to qualify for a more expensive home since you can use 75% of the other doors income to qualify which gets added to your current income!
FHA is great but it carries the MIP and UFMIP the MIP is for the life of the loan or until you refinance and VA does not have any PMI/MIP. Which is the monthly mortgage insurance that gets added to the payment, which does not benefit the owner it benefits the bank and also reduces cash flow. FHA also has the UFMIP which is painful since its 1.75% of the loan amount financed into the loan increasing the loan amount.
If you ever hit a point where you maximize your VA entitlement due to having (2) or more VA loans and cannot refinance. At that point you would switch to FHA and buy a primary going that route. So it's good to have it as a backup but VA Trumps FHA in most cases just do to the Zero down payment and No MIP/PMI.
VA and FHA also offer construction from the ground up which also covers the cost of the land/lot. They also offer renovation loans to renovate, add rooms or sqft, convert garage to bedroom, New roof, pools, etc. FHA offers the 203K and VA offers simple renovation but VA will offer 100% construction including cost or land/lot and FHA requires 3.5%.
If you ever have any questions feel free to reach out I have over 20 years' experience in both FHA & VA plus enjoy helping BP members and Veteran avoid lost time and money!
- New to Real Estate · Chicago, IL · Member since 2025 · 5 posts · 3 votes1y
Thank you Mr.Wray for the information. It was very informative and helpful. I will definitely use the information while continuing to do some more research. It has been very helpful and a lot to keep in mind. If I have any questions, I'll save you're contact information.
- 1yBryce JamisonPro MemberRental Property Investor · Mebane, NC · Member since 2015 · 494 posts · 439 votes
30K isn't going to go very far investing in real estate, especially considering I'm a huge advocate of a massive emergency fund.
The first thing I would do is try to get my savings way up. That means tightening the budget, paying off consumer debt, and getting the income higher. Yes, easier said than done.
But if I only had 30K, the fastest way to get started would be to house hack. You could buy a 3-4 bed primary residence with some cash left over, live in the smallest bedroom, and rent the others. You can then repeat this every year or 2 and in 10 years you'll be a multimillionaire with a nice portfolio. I acknowledge this isn't fast or sexy, but increasing the income will make it faster, and as you get experience you can try more sexy strategies.
- New to Real Estate · Chicago, IL · Member since 2025 · 5 posts · 3 votes1y
Yes, this is a strategy I am currently researching at the moment. Thank you for your input and information!
- 1yDrew SygitBusiness MemberProperty Manager · Royal Oak, MI · Member since 2012 · 13k+ posts · 9k+ votes
1) Focus on 2-4 unit properties
2) Explore FHA 203(k) loan which allows rehab to be included in purchase mortgage amount. This will allow you to finance improvements when you buy - allowing you to buy properties that are NOT mortgageable, which will allow you to get a better purchase price.
3) Get pre-approved for both FHA 203(k) & VA mortgages, so you can use either depending on the 2-4 unit property you find.
Your goal should be to improve and stabilize the property, so you can refinance out of the FHA or VA loan to free it up to use it again (can only have one at any given time, unless extenuating circumstances).
NOTE: you have to owner-occupy for the first 12 months per the mortgage, before you can convert to 100% rental.
Of course, you could also use each of them in consecutive years to acquire two properties.
Would also recommend living as cheap as possible, while generating as much cashflow as possible:
1) Live in the basement if possible and rent out 100% of the units. Most cities will NOT let you rent out a basement without legal egress, but most do not care if the property owner lives in an unapproved basement.
2) If you live in a unit, rent out other bedrooms as MTR or STR.
3) Once renovations done, experiment with renting out a unit as MTR or STR. If successful, convert rest of units.
Logical Property Management4.9469 Reviews - New to Real Estate · Chicago, IL · Member since 2025 · 5 posts · 3 votes1y
Thank you Mr. Sygit for the information, it is much appreciated. I will take that into consideration especially with your background in property management.
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