Have 1 property. Now what?

Question

Hi everyone -

I just purchased my first duplex on a VA loan, rents are covering the mortgage and life is good.  I plan on buying another duplex with the VA a year from now (I have to owner occupy the first place for a year), but I've got the itch and want to get my second property sooner than that.

It's unlikely I'll have enough for a conventional loan, so what other ways are there to acquire properties?

From what I know, I could do private financing, seller financing, auctions, and short sales.

Any other ideas?

Thanks!

Jason Eyerly · Answer

You could use HML to flip homes in the mean time and get to know the market. Alternatively, you could look at FSBO. Depending on what you put down for this property, you may have some equity you can use towards another. Your best bet is probably going to be finding a partner to continue moving forward with. I plan on starting with flips myself to build my cash reserves and allow me to get a few FHA homes over the next 3 years I will be spending in Vegas. Then you can take that money to make down payments on other conventional mortgages and loan methods, eliminating the need for a partner. Once you reach a certain point you won't be using conventional mortgages anyways!

Rosalina Brenda Berk · Answer

Hey @Taylor Chiu ,

If you're willing to live in the second property, maybe it's worth looking into an FHA loan (my understanding is that you can put as little as 3% down). What about looking for people to partner up with?

I recently learned about portfolio loans through a webinar that Brandon Turner had here on BP. Instead of following the rules set by Fannie Mae or Freddie Mac, the bank sets their own rules and perhaps are willing to finance you if you don't have 20% to put down.

Good luck!

Brenda

Michael Evans · Answer

You can definitely jump from your current duplex to another VA-loan purchased duplex after the one-year time requirement.  You can do the same thing with an FHA-loan property.  They will look at your first property as an investment property.  They will need to see a lease agreement and calculate the net income/loss from the property.  I haven't researched this since I assisted my father with purchase in Dec. 2009 using a $0 down VA loan, so talk to a good trusted loan broker.

God Bless You!

Taylor Chiu · Answer

Rosalina Brenda Berk Thanks for the link! Also, I'd like to do some blanket loans in the future, although I need to own some properties outright first...

Taylor Chiu · Answer

Rosalina Brenda Berk

Awesome, do you have a link to the bit about portfolio loans?

Also, have you partnered with anyone? Any advice?

Thanks!

Rosalina Brenda Berk · Answer

@Taylor Chiu

No, I haven't done any partnerships, yet, but it seems that networking on here and jumping on the Marketplace  have helped others out in finding the missing piece for their deal.

Here is the link about portfolio loans. Hope it helps! http://budgeting.thenest.com/difference-between-conventional-mortgage-portfolio-mortgage-loan-20642.html

Taylor Chiu · Answer

@Jason Eyerly

I was just thinking about getting my license, that could be a good route to go on.

Taylor Chiu · Answer

@Jason Eyerly

Do hard money lenders look at VA loans any different than other loans?

Unfortunately/fortunately we didn't put any money down on this property, so there isn't much equity to pull out at the moment.

When you say find a partner, I assume you mean someone with money who is wanting someone to help them invest in real estate?

Thanks!

Taylor Chiu · Answer

@Chance Cooper @Michael Evans

Yes, that's my understanding as well. Our plan is to get another VA loan property right when we hit our year mark of residency. Thanks!

Have 1 property. Now what?

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