Hey everyone, I'm about to close on a townhouse using the VA loan. I bought it for 260k and I'm financing half the closing fees. I am hoping to use my first home as a rental when I eventually move in 3-5 years.
I used the rent calculator and the only way I'll break even is if I were to charge 1800 in rent, which isn't good because the rent in the neighborhood doesn't go past 1500.
This is my first home purchase so I'm very wet behind the ears. I'm near Woodbridge, VA. I'm trying to learn everything I can while I save for my next purchase.
Tyler.. that sounds painful. I'd be happy to brainstorm and see what creative options you may have available if you want. (no strings attached) Shoot me a message if you're interested.
Unfortunately, not being able to set rent sufficient to cover costs is a common challenge with properties purchased through a VA loan. Depending on the state of the property, there may be some home improvement projects you can do (e.g. appliances/surfaces) that would boost the rent amount. Otherwise, need to cross your fingers that rents have gone up significantly by the time you PCS. The lesson to learn here is for a future rental, the time to do profit analysis is before you buy not after.
This will definitely be a learning experience. I got lucky with my first home before I learned how to analyze properties and grow my REI passion. It just happened to cash flow over $200. I recently REFI that property, and it is cash flowing almost $400. If you want to keep the home as a buy and hold, you always have the option to focus on loan paydown and REFI if rates are still low. There is a trade-off. This approach will slow your savings for the next investment home.
John Fabros is also spot on. Figure out what the top rentals have and upgrade the property. You are either going to upgrade the unit or have to pay down the loan if you want to breakeven.
@Lawrence McKay I will probably take you up on that! Thank you
@John Fabros It's a fairly decent move in ready house. The sellers are actually fixing/upgrading the roof. There's a few little projects around the house but it's all cosmetic
What about short term rental? Depending on the area, an STR can bring in significantly more than an LTR. You can find a property manager that will manage everything once you move.
Think your are on to something. Woodbridge, Va is extremely close to Washington D.C and the river. Based on the demand of that market, your returned could significantly increase.
The first step would be to find a short term rental property manager in the area. Going to real estate investor meet-ups or just messaging people that have a bunch of listings on Airbnb.
They will be able to run the numbers on your property. We use Airdna to do it but you have to pay by the city to get access.
We plan for $8k to stage a 3 bedroom house.
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