I am interested in using the BRRR method in the future and had some questions on the refinance part. I am currently in escrow for a single family home that will be financed through a VA loan and want to buy another property in one year. I like the idea of the BRRR method but was wondering how hard the refinancing part would be for someone in my situation. I understand that all banks will have different requirements but since I am Active Duty and do not make a ton of money and I will have one mortgage already (If everything works out) will that be a red flag for the banks? If I can find a great deal do income and debt matter as much when I go to refinance?
Are you buying a primary residence with your VA entitlement and then planning on buying an investment property later with conventional financing?
DTI's are considered with VA and Conventional. VA loans are generous with DTI's and if you purchase a multifamily - Rental income is taken into consideration. With a VA loan and Conventional the home has to be in livable and working order. Some clients I have use the VA loan to instead purchase a four unit and then take out the maximum or close to it for financing, as they get the 100% financing with 4% sellers concessions and have very little out of pocket costs. The tenants pay most of, if not all of the mortgage and then you can build up equity faster - as long as the value doesn't depreciate, all with little to no money down. They do this to get the maximum possible rent as well. Obviously you would have to make a purchase that you are comfortable with the payments.
@Charlie Fitzgerald I am buying a SFH with my VA that I plan on living in for a couple of the years, renting it out, and then trying to buy another in a year.
@Jerry Padilla My original plan was too buy a 2-4 unit with my VA loan. Since I do not have 2 years of experience I could not find a place that would take the rental income into consideration.
Thanks for the responses!
@Branden Smith it can easily be done as primary conversion (turning your current primary into rental). I have done this for years. Be careful, though, FHA just changed the rules on doing primary conversions and could also effect VA, but I have not researched that. Shoot me a message, we'll connect, and I'll let you know the details of my previous experience.