All Forum Posts by: Austin Williams

Yes, you can convert the VA to an investment property and buy another one. Basically, if your first home was purchased for $194K, you probably have VA eligibility for up to another $600kish home. (Fuzzy math--would need to see the details, all the other disclaimers...)

You can use a rental agreement to offset the payment of the home you are departing for underwriting purposes on the new purchase loan. You will need 6 months worth of the payment (including taxes, insurance, HOA) in liquid assets to show an underwriter.

In this case, I would recommend investigating a HELOC for a few reasons:

1. VA Cash Out refi's must demonstrate a Net Tangible Benefit to the veteran, strictly defined by VA, to do one of the following: eliminate PMI, reduce the rate, reduce the term, reduce the payment, increase residual income, renovate or repair your primary residence, convert from ARM to fixed rate, or stay below 90% LTV. (That last one might qualify for what you are trying to do, but you're going to run into some underwriting barriers if you simultaneously increase the rate and payment without a very strong reason--and accessing cash for real estate investment is probably not going to be what they want to see, depending on the lender).

2. Depending on your current rate, it might be beneficial not to refi into a higher rate first mortgage.

3. The HELOC is reusable--you can pay it down and run it back up. I know of an FCU here in SC that will go up to 100% CLTV (First mortgage plus HELOC limit can go to 100% of your appraised value.) Rates are higher, but if your goal is to BRRRR and recoup the funds, that might be acceptable to you for the first few rinse and repeats.

What is your current rate?  In 2021 it should have been pretty good.   

How much can you rent your current house for?  What is the payment?  

What is the house worth and what do you owe on it? 

Are you willing to move or do you want to stay in the house?

I think that will help everyone give you better advice. 

@Austin Williams - Leveraging a VA loan for a house hack is such low-hanging fruit for financial freedom. Naturally, a VA loan is an owner-occupied loan, so you do have to live in the property. If you're trying to utilize it without living there, that's simply not possible. Nonetheless, I highly recommend just sucking it up and moving into a property with a VA loan. It's an incredibly powerful way to get cash-flowing assets under your name with little to no funds out of pocket.

Trying to use it without being an owner-occupant is equivalent to wanting to have your cake and eat it too. Building wealth quickly is not an enjoyable experience—you have to go through some pain to experience the reward at the end.

Trust me, from personal experience: the quicker the wealth building = the more pain. That pain could take the form of working long hours, putting other aspects of your life aside for business, or uprooting your entire life for a short period to escape the rat race. It sure isn’t easy, but it’s definitely worth it once you make it there.

@Matthew Becker has a good point--stating your goal may help you get more specific and accurate advice.  

That said, a VA loan charges you a guarantee fee that is financed into the loan. With that much equity, you should compare rates with a conventional loan (no PMI but potentially higher interest rate) to see if the difference in rate would make sense vs the G-fee. This would depend on loan purpose and how long you plan to hold it. Also, if you think rates are coming down and a future refi is part of your strategy, then it's easier and cheaper to refi VA to VA.

VA loan is no different then any other loan. What are you trying to accomplish. Can you be a bit more specific.