VA Home Renovation Loan on Multi-family

[Austin Eichhorn]

I've been researching multifamily properties, but many of them are outdated in several ways—whether that's aging electrical wiring, a lack of central air, or roof issues. This isn't necessarily a dealbreaker, but I'd like to provide both myself (I plan to house hack) and my tenants with modern, comfortable living conditions. I also know that upgrades would make the property much more energy‑efficient and cost‑effective in the long run through lower utility bills.With that in mind, I'm considering using the VA renovation loan to update the electrical system, add central air, and address any other needed repairs or improvements within the budget.My main concern is that most of the multifamily properties I've looked at currently have tenants in place. How would tenant occupancy affect this process if I were to use the VA renovation loan? Would renovations even be possible while tenants are still living in the property? What are some important components I should consider?

[Matt F.]

This may not be what you want to hear, but you are way better off buying a property that has had systems (HVAC, electric, plumbing) updated already. Updates to those systems are expensive, and can't be done effectively if the property is occupied (assuming an overhaul is needed). They also have a lower ROI/bang-for-your-buck than aesthetic upgrades that are easier to see and enjoy. Said differently, tenants expect good HVAC, and they never think about plumbing or electrical. So $50K on new HVAC won't be rewarded with higher rents as much as $50K on new kitchen, bathroom, flooring, windows, etc. Ideally, find a property that is old, but systems have been updated, and what's left is to update/upgrade the aesthetics.