Asset Protection w/ VA Loan

5 Replies

Hi all,

I'm looking to get my first investment property sometime next year, a triplex or quadruplex. This property will be in an LLC. But I'm also looking to use my VA Loan to get myself into a househacking situation with a duplex or higher. In this case, since I can't put the property into an LLC, what would be the best way to maintain asset protection? Aside, if this property were a 4-plex, would it be worth getting a property manager?

@Derek R Schiavone You won't really need asset protection at the beginning because with a 100% LTV loan like the VA loan there won't be any equity in the home so no lawyer is going to try and force the sale. (the old squeezing blood from a turnip phrase). That being said, you will be able to to move the home into an LLC down the road (as long as your bank is cool with it - which most are).

As for the property manager that really depends on how involved you want to be. Using a property manager can allow you to qualify for a larger loan though because their landlord experience would allow you to use 75% of the anticipated gross rental income to be used towards your debt to income.

Happy to help if you have other questions!

Originally posted by @David Pere :


As for the property manager that really depends on how involved you want to be. Using a property manager can allow you to qualify for a larger loan though because their landlord experience would allow you to use 75% of the anticipated gross rental income to be used towards your debt to income. 

Very interesting. Can you elaborate on this a bit? 

 

When you buy a duplex, you can use 75% of the gross rents toward your DTI. For example, if the other unit rents for $1,000/month then you could add $750/month ($9,000 annually) to your income on the debt to income requirement. The caveat is that you must have two years experience as a landlord to utilize this income.

However, you can bring on a property manager who has this experience, and then utilize the income toward your DTI.

@Jon Lallande one of my go to VA lenders and I have broken this down to show people at a meetup before, and you can legitimately qualify for a much more expensive 4-plex than you would ever be able to qualify for with a single family home.