Hey BP, just getting started in this journey and I would love some assistance. So, my situation is confusing me a bit and I don't know what way to go with it. I bought my house back in 2015 with a VA loan for 89k and I've been making extra payments on it to pay it down faster. I'm down to under 84k and my homes value is up to almost 94k. so I have a bit of equity but not a bunch. I have gotten a new job making over double my old income so I can pay off my home much faster or invest the extra money, I'm not sure what the best move is I want to get my first rental property this year.
I just found out I can actualy get a SECOND VA home loan if I live in it for at least a year, thats not a problem I work on the road so im never home. I was thinking of getting a duplex or 4plex with the VA loan but I would have to get a MINUMUM 144k loan, I was planing on getting a property in the 50k - 80k range before I found out I could get another VA loan... So I guess my question is, what is the better choice? take the 144k no money down VA loan and get a nicer property or get a convetional loan and put down the 20- 25%? Sorry for the long post, thanks for the help!
This all depends on your goals. Do you want great cash flow? Can you achieve your goal through buying a $144k property in your area?
Don't get me wrong, VA loans are great, but don't use it just because you can; base your decisions on whether or not it will get you closer to your goal. If you can put a down payment on a property in the 50-80K range and still achieve your goal, then why not do that? Heck, you could do it twice with the same debt if you use your $144k VA benefit.
Without knowing your goals or your situation, I can't really answer this question- only you can. Take some time to identify exactly what your RE investment goals are and what your buying criteria are, and then do that. If you can do it using your VA benefit, that's awesome. If not, find another way.
@Ruary Roberson , if the numbers work do both. The VA will not cost you much so you if you have the money for the down payment you can do both. I would not personally pay down my mortgage faster, I would invest that money instead. Also bear in mind that your second and all subsequent VA loans cost more than the first. However, if the numbers work, the numbers work.
@Ruary Roberson All depends on what you want to accomplish. If you can get a good cash flowing property at 144k with less down than a 50k-80k property, I'd go with the 144k personally. Keep as much cash as possible, may be able to buy another strictly investment property sooner that way.
I would get a conventional loan since the loan will be less costly than a FHA loan. Also if you are literally never home perhaps you could rent out both units and find a crash pad for when you are not traveling.
Wow thanks for all the great advice! I like the idea of doing both haha I don't really see the downside of that if I get it going. Now just to find the right property right?
@Ruary Roberson , I would not pay down your mortgage but instead use the extra income to invest. In the matter in which to invest all depends on your goals like everyone else said.
I would like to get as many properties cash flowing as possible so I can reinvest that in to more properties... But at some point I understand it gets harder to acquire more?
I think you might be moving a little too fast and probably should sharpen your skills a newbie landlord. Are you part of a local real estate investment group and do you have a mentor? Are you currently renting out rooms in the house you are living in now? I purchased my first house using a VA loan and have owned it over 10 years so I am familiar with the process. Another thing you might want to look into is the new VA loan 203k loan program they started, which will allow you to purchase a home that needs repair and fix it up. You stated you are making double payments on your mortgage, but didn't say you are living rent free since you are renting out rooms (possibly Airbnb), is that an option? What is your current debt to credit ratio? Can you afford another mortgage? So to answer your question, you need to provide more information. What kind of return are you looking for? Anyone telling you to do one or the other can't possibly be giving you good advice if they don't know your full financial picture. What's good for them might not be good for you and vice versa.
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