2 VA loans - 2 Multi Unit properties

14 Replies

Morning Everyone,

My wife and I know its possible to have two VA loans, but we dont know if we can purchase 2 multi-family units. I know the VA has a rule that only properties up to 4 units are qualified. However is that separated by purchase? Can we buy 2 4-unit homes, if they were priced correctly? Say 200k for this example. I also read on bigger pockets that my wife and live in the other multi-family home and that counts as "owner occupied"

TL;DR Can we use a VA loan twice at one time, to purchase 2 4-unit properties, and can she occupy one property and i occupy the other that counts as owner occupied?

Hi @Jerome Angeles . I think you would have a very difficult time purchasing and VA financing two multi families within the same year, especially if they are in the same general area. The whole idea of the VA loan is to enable military members and veterans to purchase a "modest", safe home for themselves and their families. While the purchase of multifamilies (& multiple, simultaneous VA loans) is allowed, it's to help military families get into a home, not acquire investment properties.

So, yes, technically your wife can count towards the occupation requirement, but it's geared more for military members PCS'ing or setting up a household in a new location before the veteran can occupy the home, or a member on tour in one of those unaccompanied "hardship" locations where families aren't welcome, or on deployment, not for a couple who live in the same major metropolitan area.  Then, they expect you to live together.  

This is probably the best you could do- buy one multifamily this year and live in it TOGETHER. After about a year, you could try to buy another property to house-hack, but the thing is, you have to justify to the VA (your lender will submit it for you) why you need another VA loan. So, the property needs to be somewhat different from your first property. So, a single-family vs multi, less sq footage vs more sq footage (or vice versa), single-story instead of multistory, different area of town. Basically, there has to be some reason why the multifamily you currently own doesn't suit your needs anymore.

Yes, not quite as simple as that! Also, if you try to buy two multis so close together with no (or low) downpayments, you're probably going to have a pretty hard time qualifying (unless you made a boatload of money & have no debt, in which case you'd probably have money for a downpayment). Both VA & FHA only count 75% of the projected rental income from the unit(s) you aren't occupying towards your DTI qualification. If you haven't run the numbers yet, I suggest you run a few properties through a calculator. I like the Zillow mortgage calculator. Use the "affordability" one to see if you qualify for various properties. Use both your incomes, plus 75% of the projected rent for the units you won't be occupying. Plug in property taxes and insurance. For VA, set the debt-to-income at 41%. Put in all your current debt. Make sure you uncheck the "mortgage insurance" box. When you put no money down, it can be tight on multi families, even if it looks like the rent will cover the whole PITI, even with extra left over!

You cannot buy two at the same time even if you satisfy the owner occupied requirements. There are restrictions on how close geographically & time that you can use the VA loan. You can buy a house PCS right after and buy another, but there has to be a PCS to renew the benefit. Or you can buy a house, wait a year and buy another in a similar location, but you can only have two in the same area, the 2nd has to be considered an "upgrade". As far as the number of units it doesn't matter, you can get 4-plex after 4-plex as long as all your VA loans don't add up over $424,000, that it is increased in more expensive areas, over $700k in the Bay Area, Hawaii etc.

I dont know if anyone thought about this. How about dual military? Can one property 4plex be bought with 1 person's VA loan. This property would cash flow and then keep as rental. After PCS use the other member's VA loan to purchase another 4plex? This would get ride off the must sell to use problem. We all know how great it is to have cash cow and how hard it is to find it, cant just be selling it because we need capital for another opportunity and lose out on cash flow. I just hate to think about you selling and not capture the max value.

Could you not refinance out of your VA loan? The VA loan would then be paid off and bring it back to $0. I'm not sure if location or how long the loan would need to be seasoned, if at all...but in theory this would allow you to continue to acquire multifamily properties and the only stipulation would be that you have to move every 6-12 months to satisfy the "owner-occupant" requirement.

Originally posted by @Wilson Jing :

I dont know if anyone thought about this. How about dual military? Can one property 4plex be bought with 1 person's VA loan. This property would cash flow and then keep as rental. After PCS use the other member's VA loan to purchase another 4plex? This would get ride off the must sell to use problem. We all know how great it is to have cash cow and how hard it is to find it, cant just be selling it because we need capital for another opportunity and lose out on cash flow. I just hate to think about you selling and not capture the max value.

 Yes, that is totally doable. 

Once one of you is a civilian with income high enough to make it relevant (that statement I just made is PROBABLY true, for MOST people), you can actually smoosh whatever remaining VA entitlement is remaining between the two of you in order to bump up what you'd normally be able to get with a VA loan, in terms of purchase price, without putting anything down.

@Jerome Angeles thanks for posting on this subject. I wish more military members would ask about this loan since it's a really great benefit for us. I want to emphasize that speaking with a knowledgeable lender is a MUST with VA loans. There are some erroneous items in the comments on this post so I wanted to give some clarity to some items below. Using VA loans for investment properties can get sticky quickly and once you have mutliple properties it will likely confuse most people...lenders included.

1.  For most active duty military members using your BAH while living in a property with multiple units is the way to go.  You can live practically for free and receive investment income.  And when you transfer to your next duty station you can do it again but there are some really important items to understand.

2. As @Chris Mason stated you can absolutely have more than one VA loan at a time but let's take it one scenario at a time. Let's say you use your VA entitlement on one property of $200,000. That would mean that you cannot use your entitlement again on a home over $200,000. Your true "tiers" to a VA loan are over $144,000 and below $144,000. So if you can buy a duplex at $144,000 and then at your next duty station buy a four-plex at $800,000, that would be allowed. It's probably hard enough finding a Single Family home at $144,000 but in theory you could do that, then rent it out when you transfer (I hope this is making sense). As long as you have a valid reason (being reassigned is valid) then your 2nd VA loan is available to you.

3. The VA stated that most counties have "loan limits" and the loan limit for most counties is $424,100 for SFH, $543,000 for duplex, $656,350 for tri-plex, and $815,650 for 4-plex. Can you go over those amounts? Yes, but you would have to bring 25% of the difference between the loan limit and the purchase price.

4. Can your wife do this too?  Absolutely!  It would mean that she would need to qualify on her own though (and you would need to qualify on your own).  BUT A REALLY IMPORTANT ITEM WITH VA LOANS is that the VA borrower, if married, must be able to afford their debts AND the debts of their spouse....even if the spouse is NOT on the mortgage.  So once you start having multiple properties this might become a challenge on military pay.  BAH is allowed to be counted as income though.

5. Using rental income to qualify is also a very important part of this.  And some lenders are not going to be a friendly as others.  MAKE sure that they use rental income from DAY 1.  Even if the property isn't rented they should be using the potential rental income from the appraisal.  Super important here.

6. Also, you will not be able to simply "refinance" here. You could but you would need to ask your lender about the 3% equity refinance option for a non-VA loan. Meaning, a standard conventional loan will require you to have 25% equity to refinance. When you put down 0% you won't have 25% for about a decade. But there is a conventional loan that based on the geographical area will allow 3% equity to refinance. But you'll need to verify the requirements for that.

Lots to know, right?  So please speak with a lender.  Ask the lender about these areas.  If they cannot answer these questions quickly and accurately then please consider a different lender.  You don't want to be tripped up on this and ruin a great opportunity.

I know this was a lot of information but feel free to ask additional questions if needed.  Thanks!

@Andrew Postell , sir thanks for all of that great information as I have just started my first VA home loan. I also want to utilize my benefit to build a portfolio. Can you recommend someone in SA, TX or how to find someone as knowledgeable in it as the lenders? I've spoken to many agents and they don't seem to know any strategy or how to utilize the benefit in this manner. Thank you in advance.

Erik

@Andrew Postell, sir thanks for all of that great information as I have just started my first VA home loan. I also want to utilize my benefit to build a portfolio. Can you recommend someone in SA, TX or how to find someone as knowledgeable in it as the lenders? I've spoken to many agents and they don't seem to know any strategy or how to utilize the benefit in this manner. Thank you in advance.

 -Erik Oquendo

@Andrew Postell , currently I'm learning as much as I can on how to develop a strategy for using my VA home loan. So, my answer would be yes to all of that. But, BP really is against trying to go around asking for one or do biz on post. I understand their views.

I worked to get debt free and save some capital.  In a few months I will transition to RE Sales FT, and before I leave my corporate job, I like to try an use my benefit, and move on as a sales person and newbie investor.  That is where Im currently at in my journey.  Thanks for asking.

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