Hey BP fam, I am a military member looking to purchase my first property. This would be a rental and is also my first home purchase. Is the VA Loan the best loan out there for me? Also, any further recommendations for my first home?
My advice would be the same as @David Pere. If you plan to occupy the home as a primary residence, the VA loan will allow a low barrier to enter the RE space. With the VA loan, you can purchase an SFH up to a four-plex but have to occupy the property for one year. There are ways to get around the time requirement, like deployments, but generally, you have to hold the home as a primary residence for the above timeframe. The beautiful thing about VA loans is you have up to 15 years to hold the property before your required to pay capital gains tax. This allows you to hold the property for cash flow, reap the appreciation, take the depreciation, can capture amortization. You can also purchase another property following your permanent change of station, depending on your eligibility level.
Find a lender that knows VA loans and discuss the process with them.
Lender · Winlock, WA · Member since 2013 · 1k+ posts · 1k+ votes
5y
@Cole Wasden A VA loan is an excellent loan to consider using when buying any owner occupied homes. The key requirement is that you must owner occupy the property for at least 1 year. A VA loan can be used to buy 1-4 units, so you could live in one of the units and then rent the remaining. The rents coming from the other units will most likely cover your mortgage payment or most of it. So it is a great way for you to get a primary residence that will also pay you rents.
Once you get a certain amount of equity built up, 25% then you can refinance the loan into a Fannie Mae or Freddie Mac loan, thereby freeing up your ability to use the VA loan again.
You can even have 2 VA loans out at the same time if you have enough entitlement left to do the 2nd loan. In that case, you will refinance the original VA loan into a VA IRRRL loan. This loan only requires that you have lived in that property at some time in the past as owner occupied. It doesn't require you to be currently living in it as owner occupied. It can also be done up to 100% of value, so you don't need to build up any equity. Also there is no appraisal required, so you state the value and that's it.
Once you have that refinance done, then you are free to use what is left of your entitlement on a new VA Owner Occupied purchase. Rinse and repeat to as many properties as you may like to buy. Just keep following those formulas. Happy Investing!!!
Lender · Huntington Beach · Member since 2008 · 120 posts · 57 votes
5y
If I understand your question, it sounds like you want to buy a home as a rental using a VA loan. Here is the thing you have to live in the house, so your way around that is to buy 2-4 units rent out the other units. The good news is that buying units is one of the best investments you can possibly make, long term. VA loans are some of the least expensive loans anywhere, you get a lower rate and no ongoing mortgage insurance, there is an upfront insurance fee. Also the first time you use the VA loan the the upfront fee is less, if you're a disabled vet they wave it. I can only do VA loans in California, but I am willing to help you review your situation and consider your options. Regardless of where you are at. Feel free to contact me. Either way good luck on your investment!
Rental Property Investor · Springfield, MO · Member since 2016 · 1k+ posts · 890 votes
5y
@Cole Wasden you have to occupy the home if you're going to use the VA loan so your best bet is house hacking, which is one of my favorite strategies for getting started with real estate. Happy to help in anyway!
My advice would be the same as @David Pere. If you plan to occupy the home as a primary residence, the VA loan will allow a low barrier to enter the RE space. With the VA loan, you can purchase an SFH up to a four-plex but have to occupy the property for one year. There are ways to get around the time requirement, like deployments, but generally, you have to hold the home as a primary residence for the above timeframe. The beautiful thing about VA loans is you have up to 15 years to hold the property before your required to pay capital gains tax. This allows you to hold the property for cash flow, reap the appreciation, take the depreciation, can capture amortization. You can also purchase another property following your permanent change of station, depending on your eligibility level.
Find a lender that knows VA loans and discuss the process with them.