Like most people, my husband and I have read "Rich dad, Poor dad" and were inspired/intrigued by Real Estate.
So far we have decided we want to buy properties to rent. So we would fall under the category of "Buy and hold" (I think, please correct me if I'm wrong).
Husband and I are military veterans, we have not purchased with VA loan YET, but we are looking forward to it since we heard we can buy up to a 4 unit building.
Back in May my husband purchased a condo with a conventional loan (has better credit than me), and we decided to live at the unit till we make our next purchase.
Out of curiosity and in desire for another property I decided to apply for a loan but only got approved for an FHA loan. This limits my possibility to purchase a condo in our market which is Chicago...
My question is should I be discouraged? Or should I be patient, wait a few months and then apply for a VA loan (using combined income of my husband and I) and buy the 4 unit building or triplex? I don't want to get stuck, feel like I'm going no where at the moment... Thanks in advance!
So you are not on title with your husband? Or not on the deed for that condo? So, he got his credit pulled. And you applied for an FHA, and got your credit pulled. Those pulls may drop your score for a short while. So you might want to use this time to clean up any credit blemishes and let those pulls season a bit, while you learn and look for properties.
Next, each of you can use your VA to buy up to 4 units. My husband used his over a year ago (on our 30th house, over about 15 yrs), while I have just gotten qualified to use mine. We have used all kinds of financing before this, and wanted to save the "easy" VA money until recently. That means we have used a number of conventional loans along the way. You might have learned that the first 4 are relatively easy to get with lower down payments. From 5-10, lenders have been asking for 25% down, and there must be reserves set aside for each house, often 3 to six months for all of the houses. And over 10, it gets into "portfolio" money, which is a different conversation.
That all said, one of our recent lenders said we could keep moving forward into owner-occupied properties and turn the previous into rentals. This means one year of owner-occupied living, perhaps improve the property, and then move on. We've got teens, so I doubt we are actually going to move that frequently. But this lender would go up to 20 properties, if we could stomach the moving.
Back to the VA: It must be owner occupied, so if you find a 4 plex that you are willing to move into for a year, you are able to rent out the other units, and move out after the year has passed (or if you get PCS orders). You can refinance out of the VA mortgage at a future point, in order to get entitlement back again, and do it all over again. More doors only are reasonable if you are careful to buy in solid, safe neighborhoods, and if the property cash flows over the maintenance and operational expenses. Single families tend to appreciate more, while multi properties tend to cash flow more. Small plex units are still residential, while 5 units are typically commercial.
Perhaps you can find a meetup in your local area, and start meeting folks who can be part of your "team" as you grow into your investing mojo. All the best~
@Kerry Baird thank you for your response.
The current condo we are in is completely under my husbands name. We decided to do it that way so that when I go to purchase our next property I don't run the possibility of getting denied.
We currently live in the condo, 1. Because it's saving us money and has allowed us to remodel the bathroom and kitchen (which we did ourselves). 2. Being that it's a conventional loan we have to reside at the property for at least a year.
We currently purchased in a great neighborhood in Chicago and are not ready to take the risk in the lower income neighborhoods. I definitely am going to wait a few months till I re apply for a loan. I'm sure by then my credit score will go up significantly and will give me more options for others types of loans.
Thank you for your input! This is all new to us and we are open to listening to everyone who is successful like your self!
We all were new, once. We had a SSgt when we were young E-4s who bought houses and held them. It gave us a vision for where we might be in our futures. I only did ten yrs, while hubby is getting ready to retire at 24. We did most of our houses in a slow-steady-yawn sort of way, some of them by rehabbing a house with good bones while living in it, and many of the rentals by saving up down payments the old fashioned way. We're in our 40s with a lot of deals under our belts, and still make a hill of beans at the day job, if you know what I mean. But the net worth is climbing with each payment the tenants make. When it really matters, we will have greater cash flow as well.
You will learn so much by being here at BP. But the best teacher is experience, as the saying goes. I would also say that by buying in his name only, he can go up to 10 properties in his sole name, and you can go up to 10 properties in your sole name. It looks like a lot at the front end of the journey, but if you plan *now* for where you *might* be later, there is a greater probability of success. You might just find that this is your calling. All the best~
Thank you for your service. I'm curious why you did not get approved for VA and only for FHA. Unless I'm missing something, perhaps you did not speak to a VA expert loan officer? Unfortunately, there are many uneducated loan officers that don't understand VA lending, or may have overlays or unfavorable guidelines, and may direct you into another product in their best interests, and not yours.
@Kerry Baird that's great! Thank you for welcoming me to BP. Your situation sounds like ours. And thank you for the advice!
@Zack Karp hey, thank you for your reply. I did not apply for a VA loan because I was focusing on condos, most condos don't accept VA loan here in Chicago. Do you suggest we purchase with VA loan and take our focus off condos at the moment? The big problem is that by using only one income VS our combined income we are not getting approved for much... That's where we're at.