Using my Va Loan to my advantage!!
Hello everyone,
I am new to this forum but since I recently joined, I have been scouring this site trying to obtain all the information that I possibly can. Throughout my search, (as far as I know) I have yet to find an answer to the question that I am going to pose. Here is my current situation:
Military veteran who used VA Loan to buy a condo for $155K. I currently want to begin real estate investing but not quite sure how to do it. I have about $8K that I could commit to using for investing into a multi-family unit along with the equity that is already in my home which isn't a lot. I have a relative that is willing to rent out my current condo in order for me to be eligible to move into a multi-family as an owner occupant.
I have found a few multi-family units (3 to 4-plex) that range from $50K to $155K that are in C- to B- range areas. My plan is to rent my house out to my relative so that I can keep the property and show that I have a steady tenant, refinance my VA Loan into either a Conventional loan or FHA loan and then use my VA loan again to obtain another property.
I don't want to be too long-winded on my first post but I greatly encourage any type of feedback or suggestions to how I should approach this. Thank you all for your time!
-Lael
Most Popular Reply
I bought my first home using a VA loan and I close on my second VA loan next month and will convert my first home to a rental. Both homes are in the same city.
For my second loan, I sought out and found a lender that specializes in VA loans. I ended up going with Veteran's United Home Loans and they've been absolutely great. They definitely know the ins and outs of all aspects of VA loans forwards and backwards.
Since you mentioned 50-155K range, I will point out that the minimum loan amount for a "second tier entitlement" VA loan is currently $144k. So in my case, I had to find a property more than $144k and less than my remaining entitlement ($221k). That was an easy window to hit in my area for a nice SFH but I did have to pass on a lot of $125k-ish houses that would have been pretty sweet.
Also, it is possible to use rental income to offset the mortgage on the first property for DTI purposes. However, it's a bit of a pain if the property hasn't already been rented for a year. You need a signed lease with deposit and all that jazz, which is kind of awkward to arrange if you're still living in the place and not moving out for over a month. I didn't want to go through all that so I am carrying both loans on my DTI for underwriting purposes on the second loan. That did limit the amount I could get on the second loan, but I was fine with that since I didn't want to bring a ton of cash to the table (You need to bring 25% down on any overage of the loan amount not covered by the VA guarantee). But either way is an option (with or without using rental income) as long as your income supports it.
Good luck and thanks for your service.