Seeking Advice on 10-year Plan w/VA Loan to Start

Seeking Advice on 10-year Plan w/VA Loan to Start

Greensboro, NC · Member since 2018 · 23 posts · 2 votes

When I first started thinking about getting into REI, my initial thoughts were to do live-in flips with the goal of being able to pay cash for my "retirement" house approximately 10 years from now, so I won't have a house payment on my pension. However, after reading, and reading, and reading some more, I'm thinking of changing that goal to not only be able to pay cash for a home, but to also build an income stream through rentals.

My current situation: Renting a 2bd/1ba apartment in a garden-style apartment complex. Employed "full-time" but my work schedule affords me a significant number of days off, and I have the skills and capability of doing most renovations myself. I currently live in York, PA, about 50 miles from work in Baltimore, MD.

REI PLANS: I will be using a VA-Loan to start, so I will need to occupy the house for 2-years. I'm not planning on making my first purchase for about months so I can pay off some of my current debt and lower my debt-to-income ratio. Although I will be retiring from my "real" job in 10 years, this doesn't necessarily mean I will get out of REI at that time. Plans are to buy distressed properties, whether SFH or 2-4 Units. Mostly likely buying in the Baltimore area and moving out of York.

LIFE PLANS: Retire from my current job in 10 years. I will have a pension to live off of, but due to my divorce it won't be enough to live comfortably with a house payment. I will, however, be changing locations from the Baltimore, MD are to a beach in North or South Carolina.

Scenario 1: live-in flips only during my 10 years to be able to pay cash for a beach home when I leave the fire department

Scenario 2: 1st purchase a 2-4 unit, live in one unit and rent the others. After 2 years of occupancy (VA Loan), refinance and take the equity to purchase a SFH live-in flip and rent out the unit I had occupied.

Scenario 3: 1st purchase a 2-4 unit, live in one unit and rent the others. After 2 years of occupancy (VA Loan), refinance and take the equity to purchase another multi-family.

Scenario 4: Purchase a SFH and during my 2-years subdivide it into multiple properties. (I feel this is the least desirable/most expensive way, but may be easier to find properties)

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Investor · Minneapolis, MN · Member since 2015 · 252 posts · 263 votes

7y

@Matt Dubois, your scenario 1 is referred here as house hacking. People like it, but living in construction gets old ... Also in the next 10 years we will likely see another crash. VA is a great vehicle, but you have to occupy the place for 2 years, limiting your mobility / number of deals / options. My advice - get 2-4 units, your scenario 2 or 3, however in our heck of the woods VA is so strict, it is hard to find a small multifamily which will pass VA standards. Good luck.

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Rob Drum
Real Estate Broker · Bradenton, FL · Member since 2017 · 544 posts · 363 votes
7y
@Matt Dubois These can all work! Just pick one, and get started. As you grow your experience, network, and wealth, you could go in any or all of these directions. Don’t worry to much about planing 2-3 moves in advance. (its real estate not chess). Just worry about the move right in front of you. Good luck! If you focus, you can certainly achieve all your goals with REI!
0 Reply
Jim C.
Investor · Soldotna, AK · Member since 2015 · 103 posts · 64 votes
7y
Originally posted by @Matt Dubois:

When I first started thinking about getting into REI, my initial thoughts were to do live-in flips with the goal of being able to pay cash for my "retirement" house approximately 10 years from now, so I won't have a house payment on my pension. However, after reading, and reading, and reading some more, I'm thinking of changing that goal to not only be able to pay cash for a home, but to also build an income stream through rentals.
My current situation: Renting a 2bd/1ba apartment in a garden-style apartment complex. Employed "full-time" but my work schedule affords me a significant number of days off, and I have the skills and capability of doing most renovations myself. I currently live in York, PA, about 50 miles from work in Baltimore, MD.
REI PLANS: I will be using a VA-Loan to start, so I will need to occupy the house for 2-years. I'm not planning on making my first purchase for about months so I can pay off some of my current debt and lower my debt-to-income ratio. Although I will be retiring from my "real" job in 10 years, this doesn't necessarily mean I will get out of REI at that time. Plans are to buy distressed properties, whether SFH or 2-4 Units. Mostly likely buying in the Baltimore area and moving out of York.
LIFE PLANS: Retire from my current job in 10 years. I will have a pension to live off of, but due to my divorce it won't be enough to live comfortably with a house payment. I will, however, be changing locations from the Baltimore, MD are to a beach in North or South Carolina.
Scenario 1: live-in flips only during my 10 years to be able to pay cash for a beach home when I leave the fire department
Scenario 2: 1st purchase a 2-4 unit, live in one unit and rent the others. After 2 years of occupancy (VA Loan), refinance and take the equity to purchase a SFH live-in flip and rent out the unit I had occupied.
Scenario 3: 1st purchase a 2-4 unit, live in one unit and rent the others. After 2 years of occupancy (VA Loan), refinance and take the equity to purchase another multi-family.
Scenario 4: Purchase a SFH and during my 2-years subdivide it into multiple properties. (I feel this is the least desirable/most expensive way, but may be easier to find properties)
I'm in your shoes buddy except I dont have any retirement fund coming in in ten years unless I create it now. My plan is your scenario 3
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Matt Dubois
OP
Greensboro, NC · Member since 2018 · 23 posts · 2 votes
7y
Originally posted by @Rob Drum:
@Matt Dubois
These can all work! Just pick one, and get started.
As you grow your experience, network, and wealth, you could go in any or all of these directions.
Don’t worry to much about planing 2-3 moves in advance. (its real estate not chess). Just worry about the move right in front of you.
Good luck! If you focus, you can certainly achieve all your goals with REI!
Thanks!
0 Reply
Matt Dubois
OP
Greensboro, NC · Member since 2018 · 23 posts · 2 votes
7y
Originally posted by @Jim C.:

Originally posted by @Matt Dubois:
When I first started thinking about getting into REI, my initial thoughts were to do live-in flips with the goal of being able to pay cash for my "retirement" house approximately 10 years from now, so I won't have a house payment on my pension. However, after reading, and reading, and reading some more, I'm thinking of changing that goal to not only be able to pay cash for a home, but to also build an income stream through rentals.
My current situation: Renting a 2bd/1ba apartment in a garden-style apartment complex. Employed "full-time" but my work schedule affords me a significant number of days off, and I have the skills and capability of doing most renovations myself. I currently live in York, PA, about 50 miles from work in Baltimore, MD.
REI PLANS: I will be using a VA-Loan to start, so I will need to occupy the house for 2-years. I'm not planning on making my first purchase for about months so I can pay off some of my current debt and lower my debt-to-income ratio. Although I will be retiring from my "real" job in 10 years, this doesn't necessarily mean I will get out of REI at that time. Plans are to buy distressed properties, whether SFH or 2-4 Units. Mostly likely buying in the Baltimore area and moving out of York.
LIFE PLANS: Retire from my current job in 10 years. I will have a pension to live off of, but due to my divorce it won't be enough to live comfortably with a house payment. I will, however, be changing locations from the Baltimore, MD are to a beach in North or South Carolina.
Scenario 1: live-in flips only during my 10 years to be able to pay cash for a beach home when I leave the fire department
Scenario 2: 1st purchase a 2-4 unit, live in one unit and rent the others. After 2 years of occupancy (VA Loan), refinance and take the equity to purchase a SFH live-in flip and rent out the unit I had occupied.
Scenario 3: 1st purchase a 2-4 unit, live in one unit and rent the others. After 2 years of occupancy (VA Loan), refinance and take the equity to purchase another multi-family.
Scenario 4: Purchase a SFH and during my 2-years subdivide it into multiple properties. (I feel this is the least desirable/most expensive way, but may be easier to find properties)
I'm in your shoes buddy except I dont have any retirement fund coming in in ten years unless I create it now. My plan is your scenario 3
Good luck to you! I've just barely begun to casually search, but I'm really not finding much of anything available in my scenario 3. I guess it's a good thing I'm not quite ready to pull the trigger yet.
0 Reply
Jim C.
Investor · Soldotna, AK · Member since 2015 · 103 posts · 64 votes
7y
Originally posted by @Matt Dubois:

Originally posted by @Jim C.:
Originally posted by @Matt Dubois:

When I first started thinking about getting into REI, my initial thoughts were to do live-in flips with the goal of being able to pay cash for my "retirement" house approximately 10 years from now, so I won't have a house payment on my pension. However, after reading, and reading, and reading some more, I'm thinking of changing that goal to not only be able to pay cash for a home, but to also build an income stream through rentals.
My current situation: Renting a 2bd/1ba apartment in a garden-style apartment complex. Employed "full-time" but my work schedule affords me a significant number of days off, and I have the skills and capability of doing most renovations myself. I currently live in York, PA, about 50 miles from work in Baltimore, MD.
REI PLANS: I will be using a VA-Loan to start, so I will need to occupy the house for 2-years. I'm not planning on making my first purchase for about months so I can pay off some of my current debt and lower my debt-to-income ratio. Although I will be retiring from my "real" job in 10 years, this doesn't necessarily mean I will get out of REI at that time. Plans are to buy distressed properties, whether SFH or 2-4 Units. Mostly likely buying in the Baltimore area and moving out of York.
LIFE PLANS: Retire from my current job in 10 years. I will have a pension to live off of, but due to my divorce it won't be enough to live comfortably with a house payment. I will, however, be changing locations from the Baltimore, MD are to a beach in North or South Carolina.
Scenario 1: live-in flips only during my 10 years to be able to pay cash for a beach home when I leave the fire department
Scenario 2: 1st purchase a 2-4 unit, live in one unit and rent the others. After 2 years of occupancy (VA Loan), refinance and take the equity to purchase a SFH live-in flip and rent out the unit I had occupied.
Scenario 3: 1st purchase a 2-4 unit, live in one unit and rent the others. After 2 years of occupancy (VA Loan), refinance and take the equity to purchase another multi-family.
Scenario 4: Purchase a SFH and during my 2-years subdivide it into multiple properties. (I feel this is the least desirable/most expensive way, but may be easier to find properties)
I'm in your shoes buddy except I dont have any retirement fund coming in in ten years unless I create it now. My plan is your scenario 3
Good luck to you! I've just barely begun to casually search, but I'm really not finding much of anything available in my scenario 3. I guess it's a good thing I'm not quite ready to pull the trigger yet.
I'm ready to pull the trigger but cant find anything.
0 Reply
Dan Bryskin
Investor · Minneapolis, MN · Member since 2015 · 252 posts · 263 votes
7y
@Matt Dubois, your scenario 1 is referred here as house hacking. People like it, but living in construction gets old ... Also in the next 10 years we will likely see another crash. VA is a great vehicle, but you have to occupy the place for 2 years, limiting your mobility / number of deals / options. My advice - get 2-4 units, your scenario 2 or 3, however in our heck of the woods VA is so strict, it is hard to find a small multifamily which will pass VA standards. Good luck.
1 Reply
Thomas Carroll
Baltimore, MD · Member since 2016 · 14 posts · 6 votes
7y
Matt,
Love your passion and the variety of approaches. I plan to do similar things once I move back to Baltimore. The plan is to start with a live in fixer up and then turn it into a rental. I'd like to follow that up with a multi family using the VA loan. Good luck to you! I did see a post on here by an agent with some statistics about how multi family properties are hard to come by in MD but that doesn't mean it can't be done!
-Tom
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Matt Dubois
OP
Greensboro, NC · Member since 2018 · 23 posts · 2 votes
7y
Originally posted by @Dan Bryskin:

@Matt Dubois, your scenario 1 is referred here as house hacking. People like it, but living in construction gets old ... Also in the next 10 years we will likely see another crash. VA is a great vehicle, but you have to occupy the place for 2 years, limiting your mobility / number of deals / options. My advice - get 2-4 units, your scenario 2 or 3, however in our heck of the woods VA is so strict, it is hard to find a small multifamily which will pass VA standards. Good luck.
From what I understand, to do the live-in flip the idea is to stay in it for 2 years to not have to pay the Capital Gains taxes (selling before the end of year 5). So the way I see it, I'd be in it for 2 years anyway and the VA will allow me to get started earlier. After my first property, I don't think I'll need to continue to use the VA loan which will then open me up to more possibilities. Thanks for your input!
0 Reply
Matt Dubois
OP
Greensboro, NC · Member since 2018 · 23 posts · 2 votes
7y
Originally posted by @Thomas Carroll:

Matt,
Love your passion and the variety of approaches. I plan to do similar things once I move back to Baltimore. The plan is to start with a live in fixer up and then turn it into a rental. I'd like to follow that up with a multi family using the VA loan. Good luck to you! I did see a post on here by an agent with some statistics about how multi family properties are hard to come by in MD but that doesn't mean it can't be done!
-Tom
Thanks, Tom! How soon until you move back to the area? And you're right, it may be difficult, but not impossible. If there's a will, there's a way!
0 Reply
Shaune L Clark II
Rental Property Investor · Evansville, IN · Member since 2018 · 32 posts · 27 votes
7y
@Matt Dubois The plans seam solid. However, if you have not done a VA loan yet I would caution you on the "fixer upper" with a VA loan as they will require the property to pass an inspection as mentioned above. I have been there in my personal residence and it added a little more pain to the process. Also the VA option is not always as competitive as FHA. So prior to deciding on one option explore them all for rates and down payments. The plan of house hacking is a great play to make to lower your initial investment dollars. Best of luck!
0 Reply
Thomas Carroll
Baltimore, MD · Member since 2016 · 14 posts · 6 votes
7y
Moving home in December 2019 timeframe, give or take a month. Looking forward to it!
0 Reply
Joe Platt
Rental Property Investor · Colorado Springs, CO · Member since 2014 · 1 post · 0 votes
7y
@Matt Dubois Matt, I have three properties on my VA right now, not one of them required me to stay in it for 2 years...i think scenario 3 is the fastest route if your numbers add up right and you buy at the right price. Good luck!
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Jose Pena
Rental Property Investor · San Diego, CA · Member since 2018 · 53 posts · 22 votes
7y
@Matt Dubois you only need to stay for 2 years of you plan to sell the property. If your not going to sell it then you only need to stay for 12 months to meet the VA loan requirements. I did this with a distressed property. I stayed for the 2 years because I planned to sell. I made $84,000 on my first VA deal. Good luck!
0 Reply
Matt Dubois
OP
Greensboro, NC · Member since 2018 · 23 posts · 2 votes
7y
Great info, thanks everyone!
0 Reply
Caleb Heimsoth
Rental Property Investor · Durham, NC · Member since 2016 · 7k+ posts · 7k+ votes
7y
@Matt Dubois. Only need to live there 1 year. I wouldn’t get to elaborate with a ten year plan. Start with a 1 and 2 year plan and see if you can execute that first
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Eric G.
Honolulu, HI · Member since 2017 · 85 posts · 73 votes
7y
@Matt Dubois
I am a REI living in Baltimore City. My opinion is that you should go with option 3. I bought a two family home in southeast Baltimore for 260,000 in December of 2017 with a VA Loan. I just had it appraised for 360,000. I have the option to pull out 80,000 and re-invest it somewhere else while the numbers STILL work (rental income) wise.
However, here is something that you need to think about. When I purchased the home, I paid around $6,000 for the VA funding fee. In order to cash out a VA loan, you have to pay another VA funding fee of about 9-10K. So, you need to make sure that the amount you're able to pull out is worth it to add another 15-18K on the life of your loan. If the numbers still leave you with a great cash flow, it's almost a no-brainer. I still acquired this property with no money down so its a win regardless. These are just things to think about. Everyone has their own style. If you need any further advice about the city feel free to reach out.
Best of luck,
1 Reply
Matt Dubois
OP
Greensboro, NC · Member since 2018 · 23 posts · 2 votes
7y
Originally posted by @Eric G.:

@Matt Dubois
I am a REI living in Baltimore City. My opinion is that you should go with option 3. I bought a two family home in southeast Baltimore for 260,000 in December of 2017 with a VA Loan. I just had it appraised for 360,000. I have the option to pull out 80,000 and re-invest it somewhere else while the numbers STILL work (rental income) wise.
However, here is something that you need to think about. When I purchased the home, I paid around $6,000 for the VA funding fee. In order to cash out a VA loan, you have to pay another VA funding fee of about 9-10K. So, you need to make sure that the amount you're able to pull out is worth it to add another 15-18K on the life of your loan. If the numbers still leave you with a great cash flow, it's almost a no-brainer. I still acquired this property with no money down so its a win regardless. These are just things to think about. Everyone has their own style. If you need any further advice about the city feel free to reach out.
Best of luck,
Thanks, man! I will definitely be picking your brain, if that's cool. I work at the Oldtown Station, and have my eye on the SE areas - Fells, Upper Fells, Butchers Hill, etc.... Also looking at the Towson area to be near the University. There doesn't seem to be many 2-4 Units available right now, though. Or maybe I'm just not looking in the right places.
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Dominique Pradel-Lewis
Investor · Pittsburgh PA · Member since 2018 · 102 posts · 76 votes
7y
@Matt Dubois @Eric G. can he do a heloc with another bank on the va loan? My recent heloc was free of feees except if I want to sell within the next 3 years : then they would come after me for closing costs.
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Eric G.
Honolulu, HI · Member since 2017 · 85 posts · 73 votes
7y
Originally posted by @Dominique Pradel-Lewis:

@Matt Dubois @Eric G. can he do a heloc with another bank on the va loan? My recent heloc was free of feees except if I want to sell within the next 3 years : then they would come after me for closing costs.
Yes, he deff can. In my situation, it was better to cash out re-fi becuase it gave me a much better interest rate. I was going to IRRL anyway, so it kind of just made sense. It really just depends on your situation.
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