1st Purchase... Maybe? Any Guidance?

Question

I want to give you a little background on me first, and then explain what I want to do, and hopefully I can get a little guidance.

I am an active duty Marine stationed overseas. I want to get into real estate investing, and want to make it past the first purchase hump. I found a SFH that I am interested in. It is an REO, for about $55K. I have a bank on base that I can get a loan through, and I also have a brother in the location I want to make a purchase. I donâ€™t have the money to put 20-30% down like the bank wants for an investment property. I do have a few thousand, and I do have extra money monthly to cover expenses during vacancy. I also have excellent credit. I plan to hang onto the home as a rental. Some of the questions I have are as follows:

-Can I purchase a home without being at the location of it (being that I'm overseas)?
-How can I avoid the down payment for an investment property? (My bank does a â€œfuture primary residenceâ€ loan but if I donâ€™t have to live there, I donâ€™t want to. What about a hard money loan, etc.?)
-Do I need to be at the location for a HML?
-Will it be possible to be refinanced quickly? I donâ€™t think my bank here will do it...

The home I found is in a very nice subdivision, with a strong rental market. There are homes similar to it that have recently sold for around $100K. It needs little work, along the lines of basic yard care and paint (because of ugly colors). I feel like this home is a real opportunity for me, I just donâ€™t know how to take the next steps. Due to my location, there arenâ€™t any resources as far as a REI mentor that I can look to. I am hoping this forum can be somewhat of a substitute. Any help is greatly appreciated. Thanks in advance.

Mike Lettko · Answer

I'm not sure if this is the right section for this, but I think it will fit. I found a home in FL that I am interested in owning for myself. The difficulty is I am in the military, stationed overseas with my family for at least another year. I have never purchased a home, so I consider this my future primary residence. I am trying to avoid an investment loan, mainly because of the larger down payment. I would like to rent this house out until the time I intend to occupy it however. What is making this difficult is the 30-60 day after purchase occupancy that lenders require. I am not asking someone to tell me what I want to hear, but to be honest so I know what to look for. Can I avoid an investment loan? Are there lenders out there that would consider my situation, and work with me? Or am I stuck with a 20-30% down payment? Any help would be greatly appreciated. Thank you in advance.

Mike Lettko · Answer

Thanks for the information. I dont think my brother is in a position to be a partner, I am just saying here is there to help if I need it. Like being there to view the property, give me actual feedback, be there for inspections, etc. I guess my main question at this point is can I complete a home purchase without being where the home is? 
Additionally, I'm just looking for strictly an investment property, not to occupy it in the future.

C L. · Answer

VA program guidelines allow for the same primary residence exemption stated by Financeexaminer. Otherwise, you're not gonna get by the investment property requirements with just you on the loan.  Getting a mortgage is no joke these days. No "i" is left undotted.

Don't know if you can use a VA loan in this situation, but if you can't, then look for another good property that you can buy with a VA loan.

Remember, $0 down.  Find a good VA loan officer and have your brother work with him/her.

Good luck and we appreciate your bravery.

Jeff S. · Answer

Hi Mike, just wondering if you can go in partners with your brother. You will need help with finances and logistics.

If your brother is qualified then you are on your way. If not then plan B.

It sounds like you can buy owner occupied while away. Check with the bank to see if you can rent before you return.

Would you want to move in when you come back? If so then you might be on to something good.

Thanks for your service.

Mike Lettko · Answer

Any other input or opinions would be really appreciated as well. Thanks.

Mike Lettko · Answer

Thanks for the quick reply. Most of that was helpful, some I think was over my head.

The home(s) I am looking at is at my home of record. Are you saying that because of that, I can be financed as an owner occupied mortgage even if I will not be immediately living in the home? Additionally, would renting the property right away be an issue if I was financed as owner occupied?

Again, thank you very much for your help.

Bill Gulley · Answer

First, thanks for serving!

While in the military you can buy an owner occuiped home at your home of record listed in your personal files. So if you are from that area or intend to move to that area and declare that as your home of record you can buy and be financed as an owner occupied.

A HML is probably not what you want starting off as costs are much higher. Instead is there a partner you can use on your firsy deal? HMLs are fine for flips, but financing is short term and not the best for buy and holds.

However, you can refi the loan. The rule is that any refi within 12 months of purchase will be based on the sale price plus costs of improvements, and no cash out. To cash out and use the appraised value, you will need to own for more than 12 months.

It might be better for you to acquire a property with a lease-option or a contract for deed that you could finance 12 months later (don't buy in that manner with a 12 month requirements, at least 36, but you can refi anytime) That way you might have a smaller down payment.

Good luck and BE SAFE!