Clie Success Story! VA Loan Washington DC / Alexandria VA

[Cassidy Burns]

Clients Vince and Dulce just purchased a house for...... $180.30....
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Yep you heard it right , $180.30 to purchase a 3 bed/ 2 bath townhome in #Alexandria VA using the VA Loan.
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Purchase Price: $235,000
Appraised Value: $245,000
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They made $10,000 in purchased equity the day they signed on the dotted line.
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Monthly Payment: $1,679/month
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They plan on living in this 🏡 for the next 1-3 years and then turning into a long term wealth building rental.
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Projected Rent: $1,950/month
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Cash Flow: $270/month
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This is their 2nd 🏠 using this exact same strategy. This is how you build long term generational wealth.
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VA Loan is a great way to get into something with lower cash down. Have to be extremely careful with analyzing the rents. This one was a no brainer for them. They will be doing slight renovations inside as well to help with rental appeal and potential appreciation as well.

[Marian Huish]

I'm not an expert in VA Loans @Cassidy Burns but my understanding is that homes purchased with VA loans must be owner-occupied and you cannot apply for another VA loan unless the first purchased home has either been sold or the loan has been paid off.

[Adam Bankoff]

@Marian Huish You have to have the intention to live at the property for at least 1 year. The amount of VA loans is limited by the total Loan amount, not how many there are.

[Adam Bankoff]

@Cassidy Burns I was actually looking at properties for sale in that same community, as they look to have potential for cash flow. However, I did have concern with the area as far as appreciation and demand. I'm curious your thoughts on this, and how you came up with the projected rent? I'm looking to do essentially the same thing. Use a VA loan to House Hack, then in a year fully rent out the property and purchase another house hack, etc.

[Cassidy Burns]

Hi @Marian Huish , correct, they must live in the property for at least 1 year (which my clients intend to do 1-3), and its based on the VA Loan amount. This is their 2nd property through the VA Loan program.

@Adam Bankoff I like the area for this strategy.  The rent is the average in that area actually! I get a lot of my info from Rentometer.com , facebook marketplace, and craigslist .

Definitely worth looking into

[Marian Huish]

thanks- maybe I"m misunderstanding what I'm seeing on the VA website. I don't mean to be policing your post but don't believe VA loans are intended to be used for rentals. So your clients were able to obtain a 2nd VA loan?

Restoration of Entitlement

Veterans can have previously-used entitlement "restored" to purchase another home with a VA loan if:

• The property purchased with the prior VA loan has been sold and the loan paid in full, or
• A qualified Veteran-transferee (buyer) agrees to assume the VA loan and substitute his or her entitlement for the same amount of entitlement originally used by the Veteran seller. The entitlement may also be restored one time only if the Veteran has repaid the prior VA loan in full, but has not disposed of the property purchased with the prior VA loan. Remaining entitlement and restoration of entitlement can be requested through the VA Eligibility Center by completing VA Form 26-1880.

[Cassidy Burns]

Hi @Marian Huish thanks for the info. But yes, this is actually the 2nd or 3rd transaction I have done where the buyer has relocated (most of the time its due to active duty military) and use the VA loan again.

[Dag A.]

As a rule, VA loans are not used to purchase income property due to the owner-occupancy rule. But, once lived in the home at least for 12 months, it is okay to vacate and rent out the home. There are various reason to exercise this right ie moving out of town/state or need a bigger space.

Additionally, it's possible to have two VA loans at once as long as the vet has enough VA entitlement, qualifies with income and credit and meets the VA requirements for subsequent use of home loan benefits.

[Michele Z.]

@Cassidy Burns - at the end of 3 years will they refi into a conventional? Love those Alexandria rents.

[Cassidy Burns]

Hey @Michele Z. to my knowledge, they are planning on keeping the VA loan on this property. BUT, that doesn't mean they won't reassess down the road ! Time will tell.

Thanks everyone for the feedback and following along! 

[Alexander Biniam]

@Cassidy Burns - If they have already two homes using this strategy I doubt they can do it for the 3rd home since there is a VA loan cap or entitlement allowed for each area and person. This is not a long-term strategy unless they plan to refi out of a VA to something else. I can speak about this from personal experience.

[Mindy Jensen]

I think perhaps there was a point missed.

@Cassidy Burns said they're planning on owner-occupying the property for 1-3 years.

VA loans are a great way to get into a property for very little down. There is a cap on the amount of money you can borrow, but you can split that among multiple properties.

Let's say the cap is $500,000. You can buy one $500,000 property, two $250,000 properties, or five $100,000 properties. (Of course, there's the owner-occupant part, so you can't do it all at once.) So buy the first $250 property, live in it for a year then buy another one. You aren't breaking any rules by doing this.

[Cassidy Burns]

Thank you @Mindy Jensen ! I should have been a little more clear on my initial post.  

[Russell Brazil]

@Cassidy Burns Awesome. What a lot of people dont get when they move here is how much of a disadvantage a buyer is in our market using the VA loan. Takes a good agent to help overcome that disadvantage.

[Cassidy Burns]

You're the man @Russell Brazil !