What should I do sell my SF so i can buy multifamily or rent it?

12 Replies

I'm in active duty military currently stationed at Shaw airforce base but I bought a SF house in 2019 of May for $170k. I have 8 months left until I get out the military and really start full time investing into multifamily. My question is Should I sell my house which is brand new construction since 2019 in Lexington SC redbank area which is currently growing and new construction of businesses and more houses being built in my neighborhood. Or should I sell my SF for about $250k-$270k and take the profit and start buying multifamily properties? I live in a 4 bedroom 2.5 bath house 1900sqft 2 story. I believe I could maybe even refinance and lower my APR and lower my mortgage and put renters in there where I might be making about $1000 in passive income. But depending on what I buy as multifamily which I was looking at buying and starting my business in Colorado Springs area and make about $1200 passive income. I've been doing crazy math so please bear with me. I also was thinking...Sell my house make $50,000-$70,000 cash use my VA loan to purchase 1st multifamily with no down payment and house hack the 1st property than buy another multifamily with the cash I make from my single family, allowing me to live for "free" and make $500+ on passive income and than make $1200+ with 2nd multifamily and if finances allow buy a 3rd multifamily from what I have left from single family. I'm trying to start investing in Columbus Ga area since it's cheaper there and it's close to military installation and in Columbia SC as well. That is just to help me build my portfolio and than partner with great people.

Could you refinance your new build SF, take some cash out, and free up your owner occupancy VA credit and use the VA loan for a 0% down 2-4 unit? Then you could use the left over money from cash out refi to buy another investment property at 15-25% down payment?

@Larisa Dalekorey I like @Marc Rice 's idea. I would not sell the house, but would rather refi using a conventional mortgage to free up your VA loan so you can house hack a 2-4 unit property.

In my opinion, house hacking a 2-4 unit using the VA loan is the single best way to get into real estate investing. Its such a powerful strategy!

There are lots of active duty folks on these forums who are also investors (myself included) so you're in good company! Best of luck and keep us updated on your progress!

The one-stop-shop for REI
Find Local Home Improvement Pros!
Check out our network of trusted, local contractors for all of your home improvement projects.
Find a Contractor

@Larisa Dalekorey you're finding multi-family in Colorado Springs? In terms of the question you pose, for me it would come down to finding a good PM because investing out of state has its own set of fun associated with it. I look at always trying to keep what I have as opposed to selling, but thats me. Gotta love the VA loan though, its a huge part of the reason I'm doing as well as I am investment wise.

@Larisa Dalekorey - I see a lot of opinions on this thread which can be great but I think you left out a key ingredient to the equation. What goal are YOU trying to accomplish? Depending on how you answer this will greatly vary what strategy you want to take. Are you trying to get the most passive cashflow? Are you trying to build a bigger portfolio? What do you need for your business? etc.

@Colin Smith I'm trying to do both make passive income and build a portfolio. What others have said of freeing up my VA loan makes sense to me and gives me a better approach to what I've been searching for as clarification. I'm ready for this crazy journey to begin. I'm in it to win it and there is no stopping me from success! I know I can do this and I'm so thankful for the knowledge and to continue to learn more and grow as a mother, born leader, and entrepreneur/business woman.

Hey @Larisa Dalekorey,

I ask what your goals are as passive income and building your portfolio are two opposite ends of the spectrum if you're only utilizing the current assets. If you have a large amount of cash in the bank that you can deploy then you could increase your portfolio and cash flow but I get the feeling that isn't the case. 

You could sell one property to pay off another which thereby increases cash flow but doesn't increase the portfolio. Sell one to buy another which might be an even exchange but keep in mind selling real estate isn't cheap. Or you do a cash out refinance to purchase another property which will grow your portfolio but is going to decrease your cash flow as more leverage (borrowed money) means a highly debt servicing cost. Does that make sense? 

If it does, then what part of your goal is more important? Growing the portfolio or increasing the cash flow?

@Colin Smith Yes it makes sense. I'm trying to turn my VA home loan into conventional loan where in my specific area I'll be making 10% CoC ROI which will be $504 a month. Than use VA home loan to buy either SF again or multifamily that can have a little TLC like (new paint, new floors...I'm not looking for crazy major construction project for my next property) But that will add value to the property after a year because 1. it's been renovated 2. it's going to be close to military installations 3. I will repeat the process of turning my VA loans to conventional loans (if it gives me good outcome) But what's important to me right now is to be able to build passive income more than getting 100 units in 1 year. I'm trying to make the best move possible and not get myself into a situation where it will be harder to get out of. With income coming in and after refinancing I'll have some cash to put towards minor renovations to build equity. Also, my goal for 2022 is to have a total of 3 properties before 2023. I may have to go again with SF than for 3rd property go with 2-4plex.

Hey @Larisa Dalekorey,

I think you are starting to put a great game plan together. Slow growth makes for steady gains!

I would recommend talking to your lender in terms of the refinancing the current VA loan. There has been some changes to the VA lending world that allows you to have significantly more, possibly unlimited, VA loan lending with the stipulation that you're moving to a new market for each new VA loan. If the sole purpose is only to convert the VA loan to conventional to make it conventional then you may not need to. I helped many Buyers over the last several years get very good interest rates with the VA eligibility and you may want to maintain those loan terms and monthly mortgage payments. The cost to refinance isn't cheap.

Certainly as you're coming out to Colorado Springs we will want to connect. I've helped many investors use their VA loan ot purchase small multi-families, to include fourplexes. Many fourplexes also need light cosmetic remodels which might make these be a perfect fit if you're up to the challenge. And of course there are always options in the single family world.

3 properties by the end of the 2022 is absolutely an achievable goal!