Anybody do a BRRR with a zero down VA home loan?

Question

It’s not entirely a BRRR, but I’m looking into a new development neighborhood for my personal home using a VA zero down home loan and potentially want to refinance because as homes are being built the neighborhood value is going up. I want to refinance to one day move out but also 1031 exchange for others, any have experience with this or shed any insight?

Greg Morris · Answer

From what l was told from VA. You have to live in the home for one year. Afterwards you can refin the house. To buy a duplex with your VA loan you have to live in one unit for one year and have two years rental experience. Whereas both will be investment properties l dont see why you wouldn't be able to use a 1031. IRS deferr. You better talk with your acct. I like your idea though. Let us know what you find out. Thanks.

David M. · Answer

@Joaquin Gonzalez

Huh?  What 1031 exchange?  Did I lose track of your properties?  Is that a second home you are using the VA loan?  Most VA loans are for your primary residence, so stay the two years and take the irs deduction for your primary residence...

Joaquin Gonzalez · Answer

@Joseph Cacciapaglia

That’s more or less what I was asking, I’m using a VA loan now to buy a home in a new developing neighborhood and once that equity builds up I wanted to use the refi money to buy a duplex if possible with the 1031 exchange. And once I have that duplex, as well as my first home eventually use the VA once again for another personal home

Joseph Cacciapaglia · Answer

I'm not sure I completely understand what you're asking, but VA loans have a streamline refinance process that makes taking equity out in the future pretty easy and affordable. However, you can't buy a fixer upper with a VA loan, so I'm not sure about the BRRR strategy. You also can't refinance with the VA loan once you've moved out. I bought a few of my past investment properties with VA loans. I lived in them initially, and then used them as rentals once I moved out. If you do build up equity over a short period of time, I would rate and term refinance into a conventional loan, and then move and use the VA loan again. You do have to move into them and live there for some minimum timeframe.