Dual Veteran Couple looking to House Hack in high cost area

[Christopher D.]

Quick Background

• My spouse and I are 100% disabled veterans in Northern Virginia (close to major employment companies/contractors/tech hubs, Reston Town Center, Metro).
• We both work in tech, but my spouse will stop working soon(burnout).
• Goal is early retirement + passive income, not building a huge portfolio, which seems difficult in this HCOLA
• We’re not handy, but spouse is considering leaving Tech and going to school full time for carpentry utilizing Post 911 benefits
• Have around 150-200k in liquid capital
• We realize that when one spouse leaves tech, the ability to really pay down a mortgage will be greatly reduced

Current Property (Owned Free & Clear)

• Estimated value from Zillow: ~$776,300 (does not include massive kitchen renovation)
• 4 bed / 3 bath
• Estimated rent: ~$3,500/mo (without renovation included)

Scenario 1 (Leaning this way)

• Use a VA loan to buy a smaller primary residence locally (0% down). Utilize tax benefits 
• Move into it and pay down the mortgage aggressively.
• Convert the current paid-off home into a long-term rental.
• Likely hold the rental in an LLC.
• Once mortgage paid off, purchase another or possibly move to a lower COLA and "mostly" retire

Scenario 2

• Utilize capital to purchase in a lower cost of living area in a southern state (where family is) and rent the property out, staying in current home. Can't utilize the VA home loan benefits but costs are lower, open to suggestions

Scenario 3

• Utilize capital to purchase in current HCOLA to rent out, staying in current home. This seems "harder" since we can't utilize the VA home loan benefits as well, but are open to suggestions

Appreciate any insights — especially if you've done something similar in HCOL markets. Gravitated to house hacking because of the VA home loan but curious what others have done

[Aaron Zimmerman]

Before you leave your current primary residence, I'd encourage you to get a HELOC. That way, you have access to cash in the event of an emergency.

I love the VA house hack route in expensive markets. I'm in Chicago - so definitely expensive market and it's a great way to get started. With the house hack, your goal is to reduce living expenses and cash flow upon move out. The main risk with the VA house hack is that you're 100% leveraged so I wouldn't be flipping this property or have intentions to sell.