I am looking to develop a 4 unit Townhouse in the Tacoma area, live in one unit and hold the others as rentals. I am hoping to use a VA construction loan for this project. This will be my first development project and would like some information on the legalities of holding these as rentals, the tax implications, and any other general advice on this project. If I own the land and the building would these still be considered 4 separate properties and be taxed as such? Would I be able to use the VA loan to fund the construction of multiple units?
@Adam Culper Adam forgive me for saying this but if you are asking these questions you may want to fall back to seriously consider if you are ready to execute a ground up development of any size
brilliant. Thank you for the tip
Adam, it's not going to be simple. Generally, VA "1-Time Close" loans are a lot work and the rates/fees are much higher than a straight VA. Additionally, it's going to be difficult to find builders willingly to do it, especially in today's market. What I see more is people taking a standard construction loan and converting it to a VA loan ("2-Time Close" Loan).
I would recommend seeking out lenders who do this type of loan. From my personal experience, there are not that many due to the risks involved. Based on what you are looking for, I am willingly to bet that the land + building a 4-unit townhouse will exceed VA entitlement - unless you have the resources to reduce cost significantly or the funds to fill in the gap.
Yes, it's not easy. But it can be done.
Thank you for the advice. I will definitely be in touch with lenders to look into the 2-Time Close loan
First thing first, research construction cost.
In Tacoma, I've seen a number of main house + ADU considered as 2 units, so you can just build 2 of those.