Deals for Active Duty Military Personnel, Veterans, and Brats

13 Replies

Hey BP, I'd like to start off by saying thank you to all of the active duty and retired military investors on BP. I greatly appreciate your service and admire your commitment to ensuring our safety and way of life. I'm proud to call myself a military brat. My parents met in the military over 30 years ago and retired after 20 years. Mom was a rescue diver and Dad was a drug interdiction chief. We traveled all over creation and met so many great people with diverse backgrounds. I pursued an appointment to the Naval Academy but was disqualified from all service due to a (silly) medical technicality but the military has still had a profound positive impact on my life.  

My parents recently asked me to look into some real estate investment options to supplement their pensions. I saw a sign the other day that advertising 0% down benefits for veterans and active duty military personnel. I was wondering if the BP community knew of any special programs at the federal or state (Massachusetts) level that help members of the military purchase homes. Do those programs extend to investment properties or owner occupied multi-families? If you've taken advantage of one of those programs, I'd love to hear about your experience. 

This may or may not be what you're looking for;

My uncle is a former Marine. Like Trevor, though, he has no interest in REI. Shame.

In your case, a VA loan for a triplex or quad might make sense - house hacking, basically. The VA loan would allow for a very small down payment - they could live in one unit, and rent out the others.

  Factoring in taxes, insurance, management and maintenance, along with vacancy rates, it should be possible to have the rental income service the debt, pay utils, and have some left over. Could get paid to live in the new property.

  If they had more to invest and wanted more than just expenses paid and some extra cash every month, a small apartment building could do the trick. 

All active duty military and most veterans qualify for a VA home loan. I just used it for the first time last year to purchase my personal residence with 0% down. These do not extend to investment properties but I believe an owner-occupied multi-family would qualify. You can only have 1 active VA loan at any given time, and in the case that the vet wants to move from their property but keep it as a rental, it therefore would be considered an investment property and no longer qualifies for the VA loan so they must refinance it through conventional means or FHA.

The two that jump to mind are a VA loan and something that Navy Federal Credit Union (NFCU) offers. Both are 100% financing at very competitive rates. NFCU may only be open to Active Duty though but a veteran can always get a VA loan.

There are companies that specialize in VA loans but most brokers and big lenders do them. Basically just a loan guaranteed by the Veteran's Administration vice Fannie or Freddie or something. There is a funding fee of 1.5% I believe which is essentially prepaid PMI. You can only have one VA loan outstanding at a time, but you can sell or refinance into a conventional loan and reuse your VA benefit. The second time has a much higher funding fee (think points or origination fee) in the 3%+ range.There are ways to have two VAs outstanding but it greatly limits what you can buy because it is capped. Usually at around $417k but it is higher in some pricey locations. You can indeed use a VA for multi-family (1-4 units), but you have to promise to live in the property for at least a year. No investment properties. I believe the NFCU loan is the same way.

Those are the obvious ones that almost any institutional lender could fill you in on, the VA loan anyway. There is some other stuff out there such as small business loans and what not for veteran's but I am not as up to speed on those. VA loans can be a pain but 100% financing is 100% financing.


That is not true, you can have more than one VA loan at a time but must stay below a specified total limit. You can also keep your VA loan after you move out and turn it into a rental without refinancing. An FHA loan is also only for owner occupied properties. Please read more about VA loans, especially since you have one now.

A VA loan on a 4 family would be a good way to go, assuming they are willing to live in one of the units.

You do not have to refinance if you move out of a property you bought with a VA loan and convert it into a rental. You are supposed to live in it for a year but if life has other plans for you they will not recall the loan. I know a lot of guys that got orders right after buying a house with a VA and had to rent it out. No problems.

You could move every year if you wanted, but in reality it is nearly impossible to make the numbers work. You may have gone from 0% equity to 20% equity in one year from 2003 to 2004 but not now, so refinancing would be impossible. And of course, after four times it gets worse.

 @Edward B. : And of course, after four times it gets worse.

What gets worse, the loan origination percentage? Do you have any idea what it goes up to after 3% if so?

And you also have to pay closing costs as well I'm sure? Still a pretty good deal, I'm a veteran and may get into a quad this way.

No, sorry. The funding fee only goes up once ofter your first loan.

What gets worse is your ability to qualify for a loan. Most banks do VA loans. Most don't do more than four mortgages and I am not aware of anyone that does over ten. I have been told that you can always get a loan on a primary residence but my experience has been different. I haven't found anyone able to close a loan after ten despite what they promise.

So if your strategy was to just keep refinancing and using your VA loan it would get worse (maybe impossible) after four loans and almost definitely impossible after ten.

I would highly recommend using your Veteran's Benefits. You served your time, you should definitely reap the rewards, all of them.

You could theoratically gain 12 units by using this strategy and investing in quads before it really became a problem. Like I said though, it is not quite that simple, especially in 4 years, but it will certainly kick start things for you.

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