Welcome to BP @Sean Maxwell - you're in the right place to learn all about REI! I'm active duty as well and you'll find a bunch of us here plus plenty of others willing to answer questions. The entire community is great.
Get into the podcasts, forums, and blogs. You’ll find many stories of those who have been successful investing while on active duty.
Strategy wise some of it is personal preference but house hacking and buy & hold are both popular options. My biggest recommendation is upgrade to Pro so that you can get unlimited access to the calculators. Learning & practicing the math is critical for finding a profitable deal. Also, look for a local REI group so that you can network with. You can find them on this site or on the Meetup app.
Feel free to contact me with any questions or just post them in the forums. If you ask someone specific a question in a forum be sure to tag them so they get the e-mail alert. Good luck!
If i was in your shoes i would find a 2-4 plex within 30 mins of post that the average rent for each unit is about 200$ less than the BAH rate for that area. Obviously you would have to figure out weather or not the income to expense ratio is acceptable and makes realistic sense. If the math works out for the specific property the just fill the rest of the units with other active duty army. Have them set up allotments bimonthly for each paycheck so the money is just about guaranteed. The best part about it is if they do not pay or trash the units you can simply call there leadership and light a fire under them to square things away. The only caveat is that if they PCS, ETS or get diploid they can break a lease very easy.
@Sean Maxwell - I think the biggest question I would bounce back to you is what are your goals? Do you hope to buy a SFH using a portion of VA every time you PCS and then rent it after? Do you hope to generate passive CF without the hassle of managing? Do you have enough time for a fix and flip? Do you see yourself house hacking? There's a lot of options available but not all of them fit with willingness to assume risk, spend time or money, or want and need.
My wife and I are both AD and recently starting investing out of state with SFH rentals in cheaper markets than where we are currently stationed, it's been working so far but requires downpayment cash since they're not VA eligable purchases.
My best recommendation seeing that you are in the Seattle, Tacoma area and young is to use your VA loan to house hack a 2-4 plex. Take the money from your BAH that you won't be using towards housing expenses, save it, and then buy more property with it. When you PCS you can do it again at your next station. Rinse and repeat. IMO, that's the simplest way to get started for service members.
I used VA on our first two SFH and built quite a bit of equity house hacking. It's not fun doing your dishes in the tub but when all is said and done, it's a great way to build equity. We're now almost finished with our first BRRRR in Hilltop. Lenders love military and will loan to you over others who may have more money than you because you have a solid job. If we could do it over, we echo what's been said on the thread, start with a duplex/fourplex. Our near term is to house hack a fourplex, get some more experience, and move into the bigger stuff on the commercial loan side. Now that I'm nearing retirement after 19 years, I wish I had the sense you have and started investing early. Recommend you hit up a local REI meeting. We did one in Lakewood at the Ram and I met some amazing people that were very forthcoming with dos and don'ts without trying to sell me a product. Expand your network.
The only follow up to this is- learn to do your proforma math correctly and realistically. If you start asking around, a lot of people try the strategy of “buy every time you move” but this only give you some benefits (0% or low money down, low interest rates, etc). What it doesn’t help is if you overpay. Don’t run your math for “how will it perform when I move in?” so much as “how will it perform when I move out?” There are plenty of people with moderate or poorly performing rentals that don’t understand why it didn’t work. In the military community so far as I have seen, it didn’t work usually because they didn’t consider basic operating expenses properly.
Hi @Sean Maxwell ! Welcome to BP and thanks for your service! As someone else suggested, check out the Cascadia Investor’s Alliance Meet Up in Lakewood and start networking!
House hacking the VA loan financed triplex/4-plex is a good strategy but keep in mind that VA loan will require the property to be in relatively good condition. If you're looking to fix and flip anything more than a "cosmetic fixer," you'll need to consider other financing options. Your strategy really just depends on your goals. My wife and I are primarily buy and hold investors and have completed a few BRRRRs.
@Sean Maxwell. Hey sir I am active duty AF myself. Just from my limited experience i have been using the VA mortgages to my advantage. I bought my first house in Columbia SC while stationed at Shaw afb and now currently renting that one out.
Now up at minot I am buying my second home and once again using a VA Loan to finance my second home. My biggest advice is to buy a house that will be most appealing to your future tenant. Up here in minot i am buying a 2200 sqft 4br/2ba house. Which is way too big for just my wife and I but my future target market up here is military families so the home would fit the bill for them. Also, I made sure it had a two stall garage and and fenced in back yard.
In my limited experience it seems like more people than not have pets and having a fenced in yard is a must for them when looking for rental properties so something to keep in consideration.
Both houses we were able to put zero down at closing as well. Now keep in mind though on your second VA loan the funding fee goes up to 3.3 % unless you are willing to put down 5% which will then bring the funding fee back down to 1.3 % i believe. I might be slightly off on that second percentage.
Also, check with the local tax laws. Because when we moved out of our SC house our property taxes went from 4% to 6% so that ate into our monthly cashflow but had already accounted for that because we did our research beforehand so just another factor to keep in mind when looking.
It is definitely a slower route and there is a maximum cap on VA loans. Also, you can only use a VA loan on a house that you are going to live in intially so you can't use a VA loan to buy a rental property that you don't attend to live in initially. But, you can refinance your VA loan into a conventional loan to free up your VA entitlements again so that is always an option as well.
Hope this helps,
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