Use a VA loan to invest in duplex or fourplex?

Question

Hi all, my father-in-law is coming to live with us and has mentioned that he should be able to be approved for a VA loan. My wife and I already have a mortgage but want to start investing in real estate. I asked a realtor friend of mine to look into this and she said he would indeed be able to buy a duplex or fourplex with his VA loan. He has told my wife and I that since he will be living with us, we can buy a property using his VA loan. Does anyone have any experience in doing this and what we need to do?

Account Closed · Answer

I don't know anything about the VA loans, but wanted to chime in on my opinion of a duplex vs. a four-plex.

I'd rather own a four-plex.  To me, a duplex is like having a roommate.  If you get a bad duplex neighbor, it's pretty miserable.  Whereas, having one bad neighbor out of 4, isn't as bad.

And, if you get one bad tenant in a four-plex, you still have cash flow from the other units, while you're dealing with kicking out and replacing the bad one.

Duplexes usually also involve a yard that is either shared, or each unit has a yard that must be maintained.  Either one can be a problem, where one tenant takes over the yard, and/or they aren't taking care of the yard.

With the four-plex, you just hire a gardener, and there should be minimal problems regarding the common areas, compared to a duplex.

For what it's worth.  Good luck!

Robert Hidrogo · Answer

Dannica, Sue and Bryan, thank you guys so much for your replies! :)

Dannica, I do have another question though, if the fourplex I plan to purchase will be in his name, how do I get under our name? Is there any money out of pocket to be paid?

Sue, Bryan, you guys have convinced me to shoot for a fourplex.

Bryan O. · Answer

If he is living with you, then he cannot use his VA loan. The VA, similar to FHA, requires the owner to occupy the property.

I would recommend buying a 4-unit over a 2-unit, that way he only removes 25% of the income rather than 50%.

Dannica Smith · Answer

I am working on doing the same thing.  For it to work, he has to be living in at one of the units for a year or so.  He can get an eligibility letter from the VA.  Its a no money down deal.  However, the VA is very particular about the housing they fund.  The units must meet their standards.