How should I use my VA Loan: SFH or Multi-family in Reno?

4 Replies

Hi, I just got out of active-duty and am considering moving to Reno to buy/live in either a SFH (renting out part of it) vs. a multi-family (duplex or quadplex). I would really appreciate any thoughts or advice as I am learning a lot about REI and would hate to make a bad decision on our family's home purchase:

  • SFH: ~$750K, would require additional ~$90K downpayment on top of the VA Loan (given ~420K limit for 0 down)
    • Positive: Wife/kids love the home; am sure I could Airbnb the in-law suite to help pay mortgage, in great area
    • Negative: Need to use $90K downpayment/opportunity cost of having money locked up; home prices have peaked in area and may be due for correction
  • Duplex/Multi-family: ~$300K
    • Positive: I don't need downpayment, can use downpayment funds to buy another investment property, income from other unit(s) would help cover mortgage (though not totally)
    • Negative: Apt/duplex life isn't as appealing, though could do it a few more years and save up to buy dream home in next down-turn, just ok area (though kids are young so schools don't matter yet)

The emotional decision would have us jump at the house as again my wife/kids love the house has a nice yard w/ playpen, safe area, and we'd love to settle down after the constant moves but I would hate to be in a financial bind in a couple years if there is any downturn in the economy, especially if I have the chance to have additional side income by investing the downpayment funds instead as well.

Any advice?

This is one you need to discuss with your wife. If you can explain to her the benefits of buying a MFH and purchase your dream home in a few more years then that’s the way to go. But sometimes that can be a bridge too far. You don’t want to make that decision and have it strain your marriage. Happy wife, happy life.

Thanks @Jared Viernes ! Definitely agree that it's "happy wife, happy life." I have discussed w/ my wife and thankfully she's open either way. She does love the home but can see the benefit in having an extra source of passive income. I'm also torn since my wife and kids love the house, I do wonder if we'll come across another "dream house" a few years from now, though of course seeing an extra check each month from a couple rentals will help with my patience ;) 

What would you do if you were in this situation?

@Jon Li - A duplex/multi-family for less than half the price seems pretty appealing to me. I know nothing about the Reno market, but you should be able to rent a full unit of a multi-family for more than you would a bedroom in your SFR. The cash flow will likely be better on the multi-family residence.

SFRs tend to appreciate more, but betting on appreciation is rarely a good thing. Also, do you want a stranger coming into your house alongside your wife and kids? Be sure to screen the heck out of them! 

@Jon Li that's an easy choice for me. I'd do the MFH, save up for another SFH with a rehab budget. Buy a fixer upper SFH and build our "dream house" at a fraction of the cost.

When you don’t have any reason to move away other than finding the right house you will be able to really find a great deal as well as negotiate better term. This is because you Best Alternative to a Negotiated Agreement (BATNA) is just doing what you’ve been doing.  You’ll then be able to find a great house, in a great location. At a great price because you can wait to hit all three targets.

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