Hi all, have been educating myself for the last several months and thought I may have stumbled upon and interesting question, so here goes: when using my VA loan, I know I can eventually refinance to a conventional loan and use the no-money-down Va loan again, but would it be more lucrative to buy into a more expensive 4 unit that needs less maintenance and will cash flow more each month (and max out my eligibility)? I understand the potential of multiple multi-unit properties that I pay little or none of my personal money into, but if I can cash flow on B+ 4-unit investment in a B area, do you think it will be safer than dealing with 2-3 cheaper multi-families that will present more tenant issues, less cash flow, and more maintenance costs? Also I've heard I can get better interest rates without the VA loan. Thank you for your wisdom and time.
@Bryan Larsen are you planning to live in one of the units? The VA loan can only be used to purchase a primary residence, not on a straight investment property. If so, you're all good.
The difficult part about a VA loan is the cash flow since your payment is higher. When you factor in the 2.10% origination fee (financed into the mortgage) and no money down, you're financing 102.1% of the purchase price. That's much harder to cash flow than a property where only 80% of the price is financed.
That said, if you can find the deal where you still get positive cash flow, I would absolutely do it. If you can get 4 doors cashflowing with no cash out of pocket, that’s incredible. As long as you buy smart, the equity should take care of itself in the long run.
So in short, if you can find one where the numbers work for positive cash flow (after factoring in vacancy, repairs, capex, and management), I think it’d absolutely be worth it!
Best of luck.
@Bryan Larsen If cheaper multis equals more maintenance and less cashflow, then I would go with the bigger B+ multi. Or are you saying that the cheaper ones cashflow less individually, but more altogether?