How do you leverage in NJ (high tax area) using VA vs 203k
How's it everyone? Long time lurker here. I'm located in a high tax state, (northern NJ) specifically and I'm intending to acquire my FIRST multifamily (2fam) by August 2018 initially using the VA loan (s/o to @GrantCardone for convincing my wife on this idea). I've been searching and quickly analyzing properties sent by my realtor and using Redfin just as a quick basis. Here are things to consider:
- VA loan requires you to purchase a "move-in" ready/habitable property
- Considerable Property taxes
- Most properties in VA standard are in market price
- Operating costs (medium to high) - being conservative
- Cashflow = almost non-existent
I know this is not enough information to conduct a proper analysis. But for those of you who are familiar with the state, I'd really appreciate your input.
Entering at a "market price" and considering factors such as Vacancy, Prop. Mgmt, Capex, and such does seem to give any cashflow opportunities. Although, I can save by taking the risk and having a tenant pay half of my mortgage on a 2fam, BP doesn't think its worth while without a positive cashflow.
Now, maybe if I go to 3-4 family, numbers would start to make some sense. And unless I go to the 203k loan route, vice to my initial VA loan plan, cashflow would be more feasible.
For those of you who have used the VA loan living in a high tax state, how do you use the VA to leverage? My thought process was, even though you pay more interest for the life of the loan (due to no down payment) that would cost less FOR ME since I would be renting it out after the required live-in requirement by the VA. Meanwhile, I can use my reserves for something else or leave it in the market as it is.
OR
Opt out on the VA loan idea, use the 203k rehab loan to dive into my first real estate deal, use my reserves as down payment, learn the process of rehabbing, earn some equity after the repairs.
Pardon if my thought process wasn't organize as I'd like it to be. So thanks in advance for your patience.