Need advice on buying home or real estate timing.

12 Replies

Greetings all, 

New to forums but have read a lot here due to an awesome community so keep it up folks.

My question revolves around timing of buying a house vs buying real estate.

Im currently living in OH and will be moving to Texas at the end of this year. My wife and I want to buy a duplex and a house as soon as possible but are unsure of which to grab first. 

We will be using the duplex as cash flow. What I don't want to happen is to buy a house first then not be approved for the duplex and vice versa. I am a vet and will be using my VA Loan for the house and not the duplex. So which would be more wise to look for getting into first, a home our the duplex for money then the home?

Also as a second question would it be wise to start looking at a home or duplex while still here in ohio or to wait till i have feet on ground in texas? Real estate agents anyone would reference in the killeen area? 

Thanks for anything you guys provide.

I would use your va loan to buy your duplex first, live in one side and rent the other until you are ready to buy another home. You can rent the other side when you move. @Billy Cones  is a realtor here in killeen.

If I recall correctly, VA waives the occupancy period (1 year? 5?) if you relocate more than a certain number of miles away for a job. Look into this. If I were in your position, I would try as hard as I could to try to get two loans under the VA terms.

For what it's worth, you will have a much easier time financing a duplex that you owner-occupy rather than one purchased for investment purposes. 

Originally posted by @Justin Fingers :

I would use your va loan to buy your duplex first, live in one side and rent the other until you are ready to buy another home. You can rent the other side when you move. @Billy Cones  is a realtor here in killeen.

 Awesome thanks for the advice and reference.

Originally posted by @Christian Carson :

If I recall correctly, VA waives the occupancy period (1 year? 5?) if you relocate more than a certain number of miles away for a job. Look into this. If I were in your position, I would try as hard as I could to try to get two loans under the VA terms.

For what it's worth, you will have a much easier time financing a duplex that you owner-occupy rather than one purchased for investment purposes. 

 Well I never heard of the period being waived but im unsure that would apply to me. I intend on buying the duplex and home in texas and working there. I also was unaware of being able to get 2 va loans. How does that work? I will also start digging into is as well. Thank you for the info.

Another consideration:  Your gross income (the 75% that is counted from a rental property) may not be considered until the property is rented for one year.  

This happened to me on my last PCS. I bought in FL, then was moved with little notice to VA. The rental income from my FL rental was not considered in my Debt to Income calculation when attempting to secure a new FHA loan, even though I was able to rent the property right away and the rent covered the entire mortgage payment.

Good luck.  

I really like the idea of using the va loan to first buy the duplex, live in half and save money for the next one. I don't have any experience the the va system but if I were thinking about real estate earlier in my life, I would have started with a duplex.

@Matthew Byers  check out the VA Lenders Handbook Chapter 3. It's a one-stop-shop for everything you could ever want to know about VA Loans.

There is a ton of great information in there. If you wanted, you could buy your duplex and live in one side for a year to satisfy the VA requirement. Then you could refinance it into a conventional loan, move out, and re-use your full VA for a home. Don't forget that you can also buy a triplex or quadplex...that's my plan once I PCS.

Feel free to send me a message if there is anything I can do to help. Best of luck. 

Originally posted by @Ismael Reyes :

Another consideration:  Your gross income (the 75% that is counted from a rental property) may not be considered until the property is rented for one year.  

This happened to me on my last PCS. I bought in FL, then was moved with little notice to VA. The rental income from my FL rental was not considered in my Debt to Income calculation when attempting to secure a new FHA loan, even though I was able to rent the property right away and the rent covered the entire mortgage payment.

Good luck.  

 Ah ok noted greatly appreciative for the heads up.

Originally posted by @Tyler Flagg :

@Matthew Byers check out the VA Lenders Handbook Chapter 3. It's a one-stop-shop for everything you could ever want to know about VA Loans.

There is a ton of great information in there. If you wanted, you could buy your duplex and live in one side for a year to satisfy the VA requirement. Then you could refinance it into a conventional loan, move out, and re-use your full VA for a home. Don't forget that you can also buy a triplex or quadplex...that's my plan once I PCS.

Feel free to send me a message if there is anything I can do to help. Best of luck. 

Honestly a quadplex was my first choice but loads of reading shows that a general census is that if you are new to real estate than consider a duplex first because its smaller and easier to manage. I figured a quadplex would provide more cashflow though. Still in debate on which to go for really. Thank you very much for the link also i will definitely be reading it.

If investing is the primary goal, I would use VA financing for a duplex first. Generally you will have to live in a unit for a year for owner-occupied housing, so the rental income from one unit should count as income at the rental income ratio.

If you don't have much for the down payment when you are buying a house you could use an FHA loan.

You probably want to run a couple scenarios by a mortgage broker to have an idea of what lenders will qualify you to borrow.

@Matthew Byers  

This is all great advice. You can use your VA loan twice. And getting to use it on a duplex/fourplex house hack is a twice in a lifetime opportunity, especially at these rates. I wish I had done exactly that. As it is, I have one fourplex in Killeen at the moment (FHA financed, I had already used both VAs on single families).

I'm an agent in the area, and multi-families are pretty hot right now.  I just did a search and there is not a single multi-family foreclosure in the whole area.  I thought the search was broken at first.  They are getting scooped up, mostly by Austin investors (empirical observation from investors I've talked to and worked with) getting driven out of Austin by the skyrocketing prices.

Hit me up if you have any questions about the local market.

  • Rrefinancing is expensive and it is risky to assume you will be able to refi in the future....remember all those 2003-6 ARMs people were told to refinance when they reset. Call a Texas loan officer and ask them for advice. I would be inclined to buy a duplex without a VA loan and live in half while deciding where to buy my VA loan residence and finding a good deal. You will not have a lease to break! Besides, locking into a low fixed rate for the income property is probably more important than the primary because you can lower rents as needed. If rates move up a little it just means more renters (yea!) and you can buy an older or smaller property to live in--small sacrafice to put the rental business as top priority. Also, once you get the multifamily, it would seem the VA guarantee would make you a stronger applicant for your primary....because the investment property is risky....ask a mortgage broker or loan officer.

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