Sounds like a solid plan. The principle of using a $0 down VA loan is a sound leveraged investment. Using the VA loan to purchase a 4-plex, live in one unit and rent out the other three, is the best leverage of a residential property. So far you are maximizing your leverage and minimizing your vacancy risk (better to have 3 tenants than only 1 tenant). As for the energy efficiency upgrades, I don't know enough to give you an opinion on that, but again, if you can use OPM (Other People's Money) to accomplish it, then that's always the better scenario.
The name of the game in investing is all about leverage and risk reduction. You want to leverage your time and money, while shifting as much risk away from you. This is true for any kind of investing, be it real estate, stocks, bonds, precious metals or businesses. It looks like you have a very solid plan.
God Bless You!
@Account Closed I don't know what a 4 unit cost in that area but your VA loan limit is $417000. you can buy more than one as your primary residence. I have seen several cases of people buying a house for $180,000 and living in it for a year and buying another house for $200,000. No re-financing required. Just some ideas, obviously your going to get a great rate as a primary residence, build your equity as you live in it and do upgrades and look at buying another one a year or so down the road. Talk to your lender about this option. Good luck and thanks for your service, I just retired this summer.
@Account Closed depending on you lender they should be able to count 75-80 percent of the rental income that the other three units are producing towards your income making it easier to qualify for a loan. Good luck, sounds like you have put a few night out to sea thinking about your future.
Brilliant plan! I work for the Veteran Affairs and have never heard a Veteran talk about using the VA loan this way! Settle for nothing less than a fourplex to maximize the benefit of 0% down. You are well on on your way to success with such a strategic plan ;)
With all the forethought you have put into this I have no doubt it will be successful. We have a VA on our primary and were unaware of the EEM mortgage -but that is a great tip to have learned while reading your post. Good luck to you!
Hi @Account Closed , one thing I would encourage to check carefully into is those grants and scholarships. In general, government scholarships are only allowed to pay for tuition and fees. I don't believe the university would be legally allowed to accept both GI Bill and a Pell Grant to pay for the same tuition and refund you the difference. Sometimes even private scholarships are this way....tuition and fees only. Check with the financial aid office; they'll be able to clarify that for you.
Schools dont care where the money is coming from. All they will see is that you've over paid for the month and refund you the money.
@Leigh Ann Smith I went to UH after I got out of the military and they let me use both Pell Grant money and G.I. Bill money. The extra came to me and I was able to use it as needed. @Account Closed great plan. It looks really solid and I have been looking to use my VA loan and I think I might have to copy your plan. Keep in touch man and thanks for your service!
@Lee Arnold , that's great! I hope it works that way for Blayne, too. Programs run by the government are not known for their efficiency anyway. :-)
That's very true... Lol.
@Account Closed , this is a great and thorough plan, and kudos to you for thinking long-term. I'm also military and just closed on my first home with a VA loan in Hawaii. We're already saving up and planning on our next purchase.
One thing I just have to add is you have many real-estate plans listed, as well as side jobs, but you only have so many hours in your day and days in your week. Don't forget to account for the hours you will need to spend on studying outside of your classes, depending on what your intended major is. Speaking from personal experience (BS, MS, MD...eternal learner, but done with adding letters after my name for now!), I took on more than I could chew during college (side jobs, clubs, varsity sport) and had to repeat some classes. It was a painful experience finding that balance and setting priorities, and my hope is that you don't waste your GI bill and grants because you neglected to take into account of how many hours outside of class your major takes (this definitely applies if you're planning on majors such as engineering). Maybe you're a prodigy who doesn't need to study at all, which in that case, congrats:)! Good luck!
@Account Closed the GI Bill is an awesome tool. I used it to get my degree and came back into the Military as an Officer. I am also Quartermaster Corps with the 82nd Airborne Division. Sounds like you have a good plan and have put much thought into it. Good luck, update us as you progress!
Got to the Pell Grant and didn't read on, just to post, you may not be qualifying for grants receiving GI benefits as they are income qualifying, there are hooks too if you obtain income later, nice idea to double dip but I doubt you'll go that route, with additional income, you can borrow however. At rates today, on the VA, that will be a good way to go.
Leaving out your maintenance and vacancy. BAH, by grade is for housing and I did the same thing on active duty and going back to school.
Scanned the rest of your plan, you're thinking!
Make your plan and work your plan, basically sounds good. Good luck
@Account Closed suggests - you are thinking, and that's huge! Houston - solid. Moving into 4-plex - Solid again. VA - great. College, work - I like all of it.
You aim high, with a lot of moving parts. You will more than likely fail in some areas, but more than likely achieve more than most...
Blayne Nation you sound like my twin, except I start terminal leave in December from the Marine Corps and start at University of Houston this spring semester. I would love to link up with you when you arrive! Hopefully I get a good fourplex before you show up ;)
Great plan, @Account Closed !
I'm a vet, too. I did 6 years in the Navy as a nuke submariner, and now I'm taking advantage of the Post 9/11 GI Bill like you will shortly :) A few things I'd like to point out (that caught me by surprise at first):
- The textbook stipend of $1000/year pays out based on your school's schedule. My college (California State University, Long Beach) operates on semesters, so I get $500 at the beginning of Fall and Spring semesters. Quarter- and trimester-based schools may do it differently. So, plan for that.
- This one's pretty crucial: BAH is only paid when you're in school. For months you start or complete a semester (or quarter, or trimester, or summer/winter session), the VA will prorate your BAH. Summers suck for me, since I usually finish Spring in very early June and don't start summer school until the last week of June or early July. So, again, plan for that.
- Finally, and this is just lending in general: Talk to a lender now about how you can get pre-approved for the VA loan before you dive into this (and, more specifically, before you separate from active duty). Thanks to the financial crash, there are a lot of hoops to jump through to get a loan approved. I'm an agent and a full-time student, but since I don't have two years of solid income history, I can't get approved for a loan right now (and especially not since Los Angeles is so expensive).
Oh! Thank you for pointing out the VA's IRRRL! I didn't know about it at all, and now I'll use that for when I eventually buy my own home.
We got into real esate investing my buy a personal with the VA loan fixing it up and renting it out when we were transferred (Active duty Navy). We also self manage and have made a cash flow. We have bought single family as they have the same or better returns in a much more "liquid"/"appreciating" currency. I actually create a blog/website all about my model and method. Pretty darn close to everything you are describing. We even use buildium. If you want to connect just let me know.
Good plan. My biggest regret before leaving active duty was not buying a piece of real estate. I agree with @Danny Simard that there are a few issues you may find with using the GI Bill. The biggest thing is to ensure you qualify for the loan as soon as possible, because lenders will not count the housing allowance as income. This is a situation I'm facing at the moment. Another point that someone mentioned was being able to use 75-80 % of the property's current rental income to count toward your DTI ratio. My understanding is that you may use 75% toward DTI, with the caveat that you have 2 years property management experience. I currently have a post here on BP asking if anyone knows what evidence a lender will require to qualify the property management experience. Just make sure you do your research, which it seems like you do. Good luck!
You don't really need two full years of employment. Especially if you're a student! Lender may take into consideration that when you're done with school your earning potential will be greater. Let me know if you need a pre-qual.