From FHA House Hack to VA Multifamily: What Would You Do Next?

Question

Hi everyone 👋

I’m Diana, 25 years old, and looking to learn more about multifamily investing.

My husband and I bought our first home in 2022 using an FHA loan while I was in college and house hacked it. That property is now a rental, and we’re hoping to use our VA loan for our next purchase.

Our goal is to house hack a duplex or small multifamily property, but with Austin prices being what they are, I’m trying to figure out the best path forward. Should we continue pursuing a multifamily property in Austin, look at other markets, or focus on building more capital first?

I currently own a rental property and run a property turn company that services apartment communities throughout the Austin area, so I’m around real estate every day. I’m looking to learn from people who have successfully made the jump from a first house hack to multifamily investing.

If you’ve been in a similar position, I’d love to hear what you would do next.

Thank you!

Juan Yepes · Answer

Hi @Diana Ramirez,You are in a great position considering your stable job and real estate experience/asset.

VA loans are one of the best loans across the board for all of their benefits. I understand the prices in Austin have you double guessing but I would say the benefits of using primary residence VA financing to acquire multiple units with no down payment beats using investment financing to acquire a property in another area/state that isn't as expensive. You'd need to put a large down payment and rates would be higher. Also, Austin's prices are indicative of the strong and growing real estate market. You should question why other markets are not expensive. You'll want to go after areas/properties that will demand strong rents and value appreciation.

Ryan Thomson · Answer

VA financing on multifamily gets tricky in ways most agents don't flag upfront.

On a 2-4 unit with VA, you still need to occupy one unit. But the key difference from FHA is that VA doesn't have a mortgage insurance premium, which changes your cash-on-cash math significantly. On a $400K purchase, that's roughly $200-300/month back in your pocket compared to an FHA loan.

The other thing worth knowing: your FHA loan from the house hack is assumable. If you ever sell that property, a buyer can take over your rate instead of getting a new loan at current rates. Depending on when you bought and what rate you got, that's a real selling advantage worth holding onto.

On the VA multifamily move specifically, entitlement is the piece people get surprised by. In El Paso County the limit is $806,500. If you had a $350K FHA loan on the house hack, your remaining VA entitlement is around $456K. Enough for most Front Range 2-4 unit purchases without a down payment, but run the numbers with a VA-experienced lender before you pick a price point.

One more thing that could change your analysis: there are VA-assumable multifamily properties on the market right now with rates in the 2-3% range. If you can find one where the equity gap is manageable, you're not just buying a rental property, you're locking in a payment that's $800-1,000/month below what a new loan would cost you. That gap is the margin.

DM me if you want help running the numbers on a specific property.

Ray Williams · Answer

Diana, As a Veteran myself you are sitting on a gold mine. One thing that hasn't come up yet that's worth knowing before you run further numbers: VA financing on a 2 to 4 unit purchase works differently than the FHA loan you used the first time. VA does not run a self sufficiency test on 3 and 4 unit properties the way FHA does, so a triplex or fourplex that might get knocked out by FHA's rental income coverage requirement can still work with VA. You can also count a portion of the other units' rental income toward your qualifying income, typically 75 percent of the lease or the appraiser's market rent estimate if units are vacant, which matters a lot given Austin prices. On entitlement, using an FHA loan for your first house doesn't touch your VA entitlement at all since you never used VA before, so you should have full entitlement available for this purchase, meaning zero down is still on the table even in a pricier market like Austin. The one thing I'd confirm early is how the existing rental from your first property gets counted, since a documented rental history with a lease in hand usually counts fully toward qualifying income rather than the reduced percentage lenders use for a brand new rental. Worth running actual numbers on a duplex versus a triplex before deciding whether to stay in Austin or widen the search, since the math changes more with VA than it did with FHA.

Aaron Gordy · Answer

@Diana Ramirez Its better to buy in Austin right now. The market is in the bottom end of the cycle and there are some really good deals out there currently. Additionally, you have a team in place already for make readies for apartment buildings and you can use that team for your own property.

The VA loan is a great product. I use mine when I have the opportunity. I first used it on a duplex on burleson road 78741 that was dilapidated at the time. Zero down. Many years later it quadupled in value and was an infinite rate of return. I sold it and it was one of the best deals that I have ever made. At the time it was cheaper for me to live in one unit and have the other side rented out than living in a nearby apartment while attending grad school at UT. It was an easy decision.

Josh Cuevas · Answer

@Diana Ramirez you definitely have to buy right, especially if you're in a tight market. I've reused my VA loan multiple times and have always targeted small multifamily homes that need some work so I can build sweat equity in them.

I renovate my unit and either move into the next or do a quick turnaround when other units become vacant. Happy to hop on a call with you if you’d like.

Wale Lawal · Answer

@Diana Ramirez

That alone is enough to put you ahead of many other investors who haven’t yet managed to house hack their first home and work with multi-family units. I would continue targeting a duplex or multi-family property, but if Austin isn’t offering a good investment, there is no harm in broadening your scope to some other top Texas markets.

Good luck!

Caleb Brown · Answer

I would still try and use that VA loan there. It's no money down and a great loan product

From FHA House Hack to VA Multifamily: What Would You Do Next?

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