Rental Property Investor · Austin, TX · Member since 2017 · 20 posts · 4 votes
Im planning on buying my first property this year but dont know if its more beneficial to use my VA benefits or just go conventional especially since im thinking about using the BRRRR method. Any advice would be amazing thank you!!!
Investor · Boulder, CO · Member since 2016 · 1k+ posts · 1k+ votes
6y
@Jesthen Baez Good for you for getting started. Dig deeper on the VA loan as I believe you have to live in the asset for 1 year prior to moving on to your next loan/home. That said, you could do a 2-4 unit and live in 1 unit and rehab the rest... then reposition after a year. If you can do something like that, that would be an amazing start. To get a conventional investment loan, you will need more to put down and larger reserves. Depending on the scope of the rehab, I would consider doing a fix-flip loan then refi into a conventional loan. You can read more in this article here.
Investor · Boulder, CO · Member since 2016 · 1k+ posts · 1k+ votes
6y
@Jesthen Baez Good for you for getting started. Dig deeper on the VA loan as I believe you have to live in the asset for 1 year prior to moving on to your next loan/home. That said, you could do a 2-4 unit and live in 1 unit and rehab the rest... then reposition after a year. If you can do something like that, that would be an amazing start. To get a conventional investment loan, you will need more to put down and larger reserves. Depending on the scope of the rehab, I would consider doing a fix-flip loan then refi into a conventional loan. You can read more in this article here.
Rental Property Investor · Austin, TX · Member since 2017 · 20 posts · 4 votes
6y
@Whitney Hutten Thanks! Ill keep looking into that. My first choice was do a duplex and live on one side but then i ran into SFH and the BRRRR method and was just blown away!!
Realtor · San Diego, CA · Member since 2019 · 22 posts · 21 votes
6y
@Jesthen Baez VA loan is awesome if it is available to you and you're ok with staying in the home and doing a live in flip over the course of a year or so. When you want to move you can talk to your lender about best options to refinance out. That's when you'd likely go into a conventional loan.
Im planning on buying my first property this year but dont know if its more beneficial to use my VA benefits or just go conventional especially since im thinking about using the BRRRR method. Any advice would be amazing thank you!!!
The zero down VA loan will have a higher monthly payment but will allow you to retain capital for other things like improvements to the home. VA only states that you "intend" to live in the home as a primary residence. If you plan on moving out a year from now then that's fine. If this is going to be a live in flip (BRRR) then you may want to use the VA. If it's going to be a quick turn around then you may want to use conventional or private funding.
Im planning on buying my first property this year but dont know if its more beneficial to use my VA benefits or just go conventional especially since im thinking about using the BRRRR method. Any advice would be amazing thank you!!!
If the property is in good enough condition to do so, VA loan no question! VA rates are below 3% in California, which means they might be right around 3% in Texas, you aren't going to see conventional touch that. If your rate is about equal to inflation, that's essentially free borrowed money.
Real Estate Agent · Dallas, TX · Member since 2016 · 432 posts · 341 votes
6y
@Account Closed I don't think that's always true. VA loan you will get a much better interest rate and NO PMI which will likely outweigh the small down payment a conventional loan will give you.
@Jesthen Baez there is also a lot of wrong information in this thread so be careful what you hear. Also make sure you work with a lender that understands everything about the VA loan. Personally - use the VA loan hands down. It's the best loan out there.
@Casey Crowe that's incorrect. I have a 4-plex and a duplex both with my VA loan.
@Account Closed I don't think that's always true. VA loan you will get a much better interest rate and NO PMI which will likely outweigh the small down payment a conventional loan will give you.
@Jesthen Baez there is also a lot of wrong information in this thread so be careful what you hear. Also make sure you work with a lender that understands everything about the VA loan. Personally - use the VA loan hands down. It's the best loan out there.
@Casey Crowe that's incorrect. I have a 4-plex and a duplex both with my VA loan.
If I'm not mistaken I think no PMI is only for disable veterans.
Real Estate Agent · Dallas, TX · Member since 2016 · 432 posts · 341 votes
6y
@Account Closed that's incorrect.
Do VA Loans Have PMI?
VA loans do not require private mortgage insurance (PMI). No PMI is a unique benefit, as most home loan options have some form of mortgage insurance without a significant down payment.
VA loans do not require private mortgage insurance (PMI). No PMI is a unique benefit, as most home loan options have some form of mortgage insurance without a significant down payment.
Interesting, well in that case if the numbers make sense then it could be advantageous to use it.
Real Estate Agent · Dallas, TX · Member since 2016 · 432 posts · 341 votes
6y
@Casey Crowe absolutely! It's been pivotal in my properties to be able to utilize the VA loan. The new 2020 guidelines make it even better too with no limit.
@Casey Crowe absolutely! It's been pivotal in my properties to be able to utilize the VA loan. The new 2020 guidelines make it even better too with no limit.
Do you have a good reference where I can read up on the details? I'd love to use mine again for real estate!
@Casey Crowe absolutely! It's been pivotal in my properties to be able to utilize the VA loan. The new 2020 guidelines make it even better too with no limit.
What are the new 2020 guidelines because the people who I know who have used the VA loan have always had a cashflow problem.
Lender · CA · Member since 2015 · 9k+ posts · 10k+ votes
6y
Interesting, well in that case if the numbers make sense then it could be advantageous to use it.
All anyone needs to know about VA loans is that every single military veteran in the mortgage industry that I have ever met is personally in a VA loan, myself included. This is inclusive of those in states with state-sponsored pseudo-VA loan programs, and inclusive of folks that are members of institutions offering their own pseudo-VA type loan program. Doesn't matter, they all get the standard vanilla VA loan.
If all we know about internet plans is that it turns out that everyone selling internet service personally uses the Vantigo S23-b internet plan for their own internet needs, that's a good indication that most, if not all, of us should probably be using the Vantigo S23-b internet plan, right? It's not crazy to figure out why everyone that's a subject matter expert picks the Vantigo S23-b, but it's a foregone conclusion that that's probably the best damn internet service plan and provider that there is.
Lender · CA · Member since 2015 · 9k+ posts · 10k+ votes
6y
What are the new 2020 guidelines because the people who I know who have used the VA loan have always had a cashflow problem.
VA rate will always be the lowest, but even with that your 0% down monthly payment will end up ballpark 15% or 20% higher than someone putting 20% or 25% down.
You can of course put 20% down, or 15% down, or 50% down, or whatever, and take out a VA loan. Most elect not to do it. But it's silly to put 0% down and then wonder in bewilderment why (before sufficient time has passed for there to have been significant rent appreciation) it's hard to cashflow when you're 20% more in debt than everyone else trying to cashflow at that exact same price point, having one's self put nothing down. :) Veterans are a small minority, the market finding it's supply-and-demand rent-to-price ratio equilibrium is finding that equilibrium at price points wherein the overwhelming majority are putting 20% or 25% down, so if you're putting 0% down and paying that same purchase price, you may have a hard time of the cashflow game (until/unless several years have passed, not necessarily just the minimum 12 months of personal owner occupancy).
Rental Property Investor · Springfield, MO · Member since 2016 · 1k+ posts · 890 votes
6y
Check out this article I wrote on BiggerPockets, should help clarify some of your questions! https://www.biggerpockets.com/blog/breakdown-VA-loan
Here is the sequel: https://www.biggerpockets.com/blog/benefits-va-loan
VA loans do not require private mortgage insurance (PMI). No PMI is a unique benefit, as most home loan options have some form of mortgage insurance without a significant down payment.
Interesting, well in that case if the numbers make sense then it could be advantageous to use it.
All anyone needs to know about VA loans is that every single military veteran in the mortgage industry that I have ever met is personally in a VA loan, myself included. This is inclusive of those in states with state-sponsored pseudo-VA loan programs, and inclusive of folks that are members of institutions offering their own pseudo-VA type loan program. Doesn't matter, they all get the standard vanilla VA loan.
If all we know about internet plans is that it turns out that everyone selling internet service personally uses the Vantigo S23-b internet plan for their own internet needs, that's a good indication that most, if not all, of us should probably be using the Vantigo S23-b internet plan, right? It's not crazy to figure out why everyone that's a subject matter expert picks the Vantigo S23-b, but it's a foregone conclusion that that's probably the best damn internet service plan and provider that there is.
Yea, I think it's a great deal. I know people in them too, primarily for their residence though. I'm just saying that if you're doing a house hack and you don't have money then it's probably worth it. But if you're going to get it and move out there will be some complications. Some which include cashflow because when you have zero equity in a home the mortgage is higher and the debt service is higher. This has caused problems for people. But don't Not do it, just run the numbers and beware.
@Casey Crowe absolutely! It's been pivotal in my properties to be able to utilize the VA loan. The new 2020 guidelines make it even better too with no limit.
What are the new 2020 guidelines because the people who I know who have used the VA loan have always had a cashflow problem.
VA rate will always be the lowest, but even with that your 0% down monthly payment will end up ballpark 15% or 20% higher than someone putting 20% or 25% down.
You can of course put 20% down, or 15% down, or 50% down, or whatever, and take out a VA loan. Most elect not to do it. But it's silly to put 0% down and then wonder in bewilderment why (before sufficient time has passed for there to have been significant rent appreciation) it's hard to cashflow when you're 20% more in debt than everyone else trying to cashflow at that exact same price point, having one's self put nothing down. :) Veterans are a small minority, the market finding it's supply-and-demand rent-to-price ratio equilibrium is finding that equilibrium at price points wherein the overwhelming majority are putting 20% or 25% down, so if you're putting 0% down and paying that same purchase price, you may have a hard time of the cashflow game (until/unless several years have passed, not necessarily just the minimum 12 months of personal owner occupancy).
Exactly! Just a word of caution. Don't not use it but don't be surprised if you have a cashflow issue. Thanks.