New to Real Estate. What made you better ? What did you do wrong?

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New to Real Estate. What made you better ? What did you do wrong?

Kyle Press
NJ · Member since 2022 · 16 posts · 20 votes

Hello, I came across the idea because I need to find a place to live soon. I'm currently active duty and once I make rank , I'm getting kicked out of the barracks and into town. With that, I thought why rent , and just save money, when I can utilize a VA loan and earn some money via an investment. The overall cash flow isn't much more (after accounting for mortgages + operating costs ) than if I just saved , but it is, just that much more. Plus it is exposure to what it's like being a landlord. I've ran the numbers on two separate properties and taken numerous things into account from broken water heaters to selling the house and how much I would make overall , and how much I should save should an emergency happen. I would be living in the house as well, (house hacking?) so I would basically be living for free. My question is this: is there anyone who has experience using a VA loan and would be willing to part some knowledge. That, and when you were young in the business, whether you were trying to become a full time real estate investor, or simply becoming a landlord (like I am) to make some extra money, what did you learn? What are things I should be cognizant of? What are some of the things that you didn't do, which would make me better if I did. Thanks for taking the time to read this and I look forward to reading what you all have to say.

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Nathan GesnerBusiness Member
Moderator
Real Estate Broker · Cody, WY · Member since 2010 · 28k+ posts · 41k+ votes
4y
Quote from @Kyle Press:

Hello, I came across the idea because I need to find a place to live soon. I'm currently active duty and once I make rank , I'm getting kicked out of the barracks and into town. With that, I thought why rent , and just save money, when I can utilize a VA loan and earn some money via an investment. The overall cash flow isn't much more (after accounting for mortgages + operating costs ) than if I just saved , but it is, just that much more. Plus it is exposure to what it's like being a landlord. I've ran the numbers on two separate properties and taken numerous things into account from broken water heaters to selling the house and how much I would make overall , and how much I should save should an emergency happen. I would be living in the house as well, (house hacking?) so I would basically be living for free. My question is this: is there anyone who has experience using a VA loan and would be willing to part some knowledge. That, and when you were young in the business, whether you were trying to become a full time real estate investor, or simply becoming a landlord (like I am) to make some extra money, what did you learn? What are things I should be cognizant of? What are some of the things that you didn't do, which would make me better if I did. Thanks for taking the time to read this and I look forward to reading what you all have to say.


You're making the right choice. I served for 21 years and wish I had known about house-hacking when I was young and single!

You would preferably buy a four-plex, but anything with 2-4 units will work. You live in one and rent the others out. The more units, the more likely they will pay all your expenses and you can just pocket the BHA and save up for your next investment.

VA gets you 0% down, so I would use that to start. You can buy up to four units. Live in one while renting the other three out. You should make enough from the rent income to cover all your expenses and then you can pocket the BHA for your next investment. Once you've saved up enough money, buy another four-plex using an FHA loan and move into that. Now you'll have seven rentals and one apartment you occupy. When you PCS, do it again.

Keep in mind you typically need to own a rental for at least one year before the bank will consider the rent as income and approve you for another FHA loan. You could possibly buy 2-3 properties at each duty station but make sure you can occupy for a year before you are PCS'd an unable to purchase at the new location.

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  • Nathan GesnerBusiness Member
    Moderator
    Real Estate Broker · Cody, WY · Member since 2010 · 28k+ posts · 41k+ votes
    4y
    Quote from @Kyle Press:

    Hello, I came across the idea because I need to find a place to live soon. I'm currently active duty and once I make rank , I'm getting kicked out of the barracks and into town. With that, I thought why rent , and just save money, when I can utilize a VA loan and earn some money via an investment. The overall cash flow isn't much more (after accounting for mortgages + operating costs ) than if I just saved , but it is, just that much more. Plus it is exposure to what it's like being a landlord. I've ran the numbers on two separate properties and taken numerous things into account from broken water heaters to selling the house and how much I would make overall , and how much I should save should an emergency happen. I would be living in the house as well, (house hacking?) so I would basically be living for free. My question is this: is there anyone who has experience using a VA loan and would be willing to part some knowledge. That, and when you were young in the business, whether you were trying to become a full time real estate investor, or simply becoming a landlord (like I am) to make some extra money, what did you learn? What are things I should be cognizant of? What are some of the things that you didn't do, which would make me better if I did. Thanks for taking the time to read this and I look forward to reading what you all have to say.


    You're making the right choice. I served for 21 years and wish I had known about house-hacking when I was young and single!

    You would preferably buy a four-plex, but anything with 2-4 units will work. You live in one and rent the others out. The more units, the more likely they will pay all your expenses and you can just pocket the BHA and save up for your next investment.

    VA gets you 0% down, so I would use that to start. You can buy up to four units. Live in one while renting the other three out. You should make enough from the rent income to cover all your expenses and then you can pocket the BHA for your next investment. Once you've saved up enough money, buy another four-plex using an FHA loan and move into that. Now you'll have seven rentals and one apartment you occupy. When you PCS, do it again.

    Keep in mind you typically need to own a rental for at least one year before the bank will consider the rent as income and approve you for another FHA loan. You could possibly buy 2-3 properties at each duty station but make sure you can occupy for a year before you are PCS'd an unable to purchase at the new location.

    The DIY Landlord Book4.7247 Reviews
    WebsiteView Page
    2Reply
  • David Bain
    Agent · Honolulu, HI · Member since 2017 · 97 posts · 48 votes
    4y
    Quote from @Nathan Gesner:
    Quote from @Kyle Press:

    Hello, I came across the idea because I need to find a place to live soon. I'm currently active duty and once I make rank , I'm getting kicked out of the barracks and into town. With that, I thought why rent , and just save money, when I can utilize a VA loan and earn some money via an investment. The overall cash flow isn't much more (after accounting for mortgages + operating costs ) than if I just saved , but it is, just that much more. Plus it is exposure to what it's like being a landlord. I've ran the numbers on two separate properties and taken numerous things into account from broken water heaters to selling the house and how much I would make overall , and how much I should save should an emergency happen. I would be living in the house as well, (house hacking?) so I would basically be living for free. My question is this: is there anyone who has experience using a VA loan and would be willing to part some knowledge. That, and when you were young in the business, whether you were trying to become a full time real estate investor, or simply becoming a landlord (like I am) to make some extra money, what did you learn? What are things I should be cognizant of? What are some of the things that you didn't do, which would make me better if I did. Thanks for taking the time to read this and I look forward to reading what you all have to say.


    You're making the right choice. I served for 21 years and wish I had known about house-hacking when I was young and single!

    You would preferably buy a four-plex, but anything with 2-4 units will work. You live in one and rent the others out. The more units, the more likely they will pay all your expenses and you can just pocket the BHA and save up for your next investment.

    VA gets you 0% down, so I would use that to start. You can buy up to four units. Live in one while renting the other three out. You should make enough from the rent income to cover all your expenses and then you can pocket the BHA for your next investment. Once you've saved up enough money, buy another four-plex using an FHA loan and move into that. Now you'll have seven rentals and one apartment you occupy. When you PCS, do it again.

    Keep in mind you typically need to own a rental for at least one year before the bank will consider the rent as income and approve you for another FHA loan. You could possibly buy 2-3 properties at each duty station but make sure you can occupy for a year before you are PCS'd an unable to purchase at the new location.

    I completely agree with this.  I had a family my entire time in service and a multiplex home isn't something they would be too stoked about.

    That said, if a young, single, version of myself existed all those years I would have loved to grab a multiplex everywhere. 
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  • Evan Polaski
    Cincinnati, OH · Member since 2020 · 4k+ posts · 3k+ votes
    4y

    @Kyle Press, while I cannot talk to you about specifics of your situation, I can talk about what made me better and where I went wrong, which I think are one in the same.

    Do not over stretch yourself.  While we can't all wait until we have $100k in reserves, you should go in assuming you will be living along with no tenants. Does your military salary cover the reasonable what-ifs?  Per your post, it sounds like it does.  And your head is in the right place: HVAC, appliances, bad tenants all cost money and sometimes sooner than you expect.  I have heard stories of the first tenant in someone's property causing $20k of damage, and they disappeared, so hard to claim that judgement.

    A learning lesson, that thankfully did not through major financial costs: lower end properties bring lower end tenants.  Lower end tenants tend to turn over more frequently, and do more "wear and tear".  If you underwrite your turns the same for a class C property and a class A property, you are fooling yourself.

    And lastly, budget for everything.  Kitchens needs replaced every 15-20 years, roofs every 25 if new, side walks, HVAC, water heaters, etc.  It all needs replaced eventually.  If you are not budgeting for it, it doesn't matter.  As for cosmetic (kitchens, flooring, etc) even though you may have a livable place, if these don't stay fairly current, you will feel it in rent level and tenant profile.

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