Newbie and a Question

13 Replies

Hello, my name is Jesse and I'm brand spanking new to biggerpockets. I first became interested in investing in real estate at a young age, when a package belonging to the owner of my parent's house was mistakenly sent to us. We had never met the guy but we found out his cell phone number and told him we have his mail. He answered his phone in the middle of a few rounds of golf in Hawaii. That perked my interest, but I'm not dreaming about playing golf in Hawaii. I want to be able to support my family and spend quality time with them. 

I'm 23 and would like to buy my first single family home by May of next year. I'm military with excellent credit, so I don't think I'll have an issue qualifying for a VA loan. However, my question is I want to buy a house and be able to rehab it enough to either sell it for a profit or rent it to a family when I move to San Diego.

My question is: How can I finance the repairs/remodeling of the house? Can I use the loan as part of the money to do this? I don't have $10000 to rehab and would like to put money down on the loan.

Thanks for the help! This site has already given me a lot of information and I'm excited to get started!

Originally posted by @Dawn Anastasi :

@Jesse Newell  welcome to the site!

Are you looking at living in the home you're thinking of rehabbing?

 Yes, Dawn. I plan to live in the house from May 2015 to about March of 2016.

Thanks, Dawn! I'll see what I can find out. I'm also interested in how other people have financed a rehab as well. 

@Jesse Newell  

A buddy of mine is looking to buy a 3 unit in Chicago using a VA loan. His loan terms are 0% down and plus he is getting $10k credit through his VA loan. He will be living in one unit and renting out the other two, which will cover big chunk of his mortgage.

Have you looked into doing something similar?

Medium logoSharad M., REsimpli | [email protected] | 619‑786‑3482 | http://reSimpli.com | Podcast Guest on Show #155

@Sharad M.  

I have thought about that. I need to research this VA loan and what exactly it entails. Thanks for the suggestion!

@Jesse Newell  

It is nice to meet you. My husband is active duty navy. We bought our first house at 23 and 25. In the last 3 years we have bought 5 houses with 3 offers out standing. We are on tract to accumulate another 5 within the next 18 months. We have bought all houses as buy and hold. Our first house was buy fix and hold. 2 of the houses were as personal properties (VA), 2 were pure investments and 1 conventional 5% down. We have used up our VA but now use a mixture of conventional and 5% down.

We buy distressed properties foreclosures and shortsales. Short Sales are my favorite. While they take along time you can get them in good condition for the same prices as foreclosures that are dumps. 

We bought our first gutter on a VA loan. So it is possible to get a fixer on a va loan. Virginia Beach is a harder area to buy flips. We bought a fix and hold and that turned out really well. Since we finance the complete house we used our money to fix it up. We put about 12k of materials into the house. We than rented it out. While the profit in the beginning was $240 over the past 2 years it has grown closer to $400. That is not including the fact that we put that same amount in the principle almost.

Check out my website in my signature. It talks about the VA loans. Investing and using personals turned rentals as an investment strategy.

Originally posted by @Jesse Newell :

Hello, my name is Jesse and I'm brand spanking new to biggerpockets. I first became interested in investing in real estate at a young age, when a package belonging to the owner of my parent's house was mistakenly sent to us. We had never met the guy but we found out his cell phone number and told him we have his mail. He answered his phone in the middle of a few rounds of golf in Hawaii. That perked my interest, but I'm not dreaming about playing golf in Hawaii. I want to be able to support my family and spend quality time with them. 

I'm 23 and would like to buy my first single family home by May of next year. I'm military with excellent credit, so I don't think I'll have an issue qualifying for a VA loan. However, my question is I want to buy a house and be able to rehab it enough to either sell it for a profit or rent it to a family when I move to San Diego.

My question is: How can I finance the repairs/remodeling of the house? Can I use the loan as part of the money to do this? I don't have $10000 to rehab and would like to put money down on the loan.

Thanks for the help! This site has already given me a lot of information and I'm excited to get started!

Hey! You may want to read more about FHA 203K loans. I used an FHA loan to finance my first property. The FHA loan allows you to put 3.5% down if you will owner occupy and the 203K loan allows you to finance repairs. Be prepared for extra redtape, but it's worth it. You could buy up to a fourplex if you will occupy one unit.

When I looked into it, the FHA loan for a fourplex allowed a higher LTV (loan to value - ie what % of your income they use to qualify you for the mortgage) and allow you to count some (usually 75%) of the rental income of the property. So if you find a triplex with two units rented, you could use the income from those two units to help qualify for the place. The mortgage folks will likely need leases for those two units to qualify that income.

Just check with the mortgage officers about any other FHA rules with occupancy and any of the figures I gave above - I'm not a mortgage officer, agent, or lawyer - but did a lot of research when I was first looking.

If I had a shot at buying a place at 23, I would have definitely bought a duplex, triplex, or fourplex using an FHA loan. It could be a great way to jump start your real estate and seemed like a really underused tactic to get moving on building wealth. Worth a look! Good luck.

@Jesse Newell  Welcome to the site, always happy to see more people from the Hampton roads area. I am retired military. My wife and I are investors and also in the real estate business. My wife is a real estate broker and runs a property management business, currently just over 200 units. I am a realtor working with investors and first time buyers teaching investing, and also a licensed contractor doing repairs and rehabs.  Fell free to reach out if you need any help or information about the area.

@Jesse Newell  

Welcome. Thanks for your service. Time to build the foundation below.

Check out the Start Here page http://www.biggerpockets.com/starthere

Check out BiggerPockets Ultimate Beginner's Guide - A fantastic free book that walks through many of the key topics of real estate investing.

Check out the free BiggerPockets Podcast - A weekly podcast with interviews and a ton of great advice. And you get the benefit of having over 90 past ones to catch up on.

Two Great reads, I bought both J. Scott The Book on Flipping Houses,The Book on Estimating ReHab Costshttp://www.biggerpockets.com/flippingbook

Locate and attend 3 different local REIA club meetings great place to meet people gather resources and info. Here you will meet wholesalers who provide deals and all the cash buyers (rehabbers) you will need.

Consider checking out HUD homes for small multi's owner occupied gets first crack.

You might consider Niche or Specialized Housing like student housing. Rents can be 2-4 times more. Remember you don't have to own a property to control it.

Download BP’s newest book here some good due diligence in Chapter 10. Real Estate Rewind Starting over

http://www.biggerpockets.com/files/user/brandonatbp/file/real-estate-rewind-a-biggerpockets-community-book

Good luck

Paul

You won't be able to finance the rehab w a va loan and depending on what needs fixed, might not even be approved for use.  What is the end goal in the purchase?  What I would look for in a flip and hold are different and most likely in different neighborhoods here.

@Jesse Newell  Welcome!!!   

What @D K. said.  I used the 203k program to purchase and rehab a 2 unit that I am owner occ and renting the lower unit.  There was a bunch of red tape and hassles that you can read about in my post FINALLY!!! Closed on my 203K but in the end the program worked well. After reading that, you'll know if you have the stomach for it and what NOT to do. :) I don't know anything about VA so I can't compare the two. Well wishes

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