All Forum Posts by: Daniel Lehman

I live in San Diego, CA, and I really want to get more involved in RE investing. I left the Marine Corps in 2004, and started in mortgage banking so I have a really good understanding of finance/analysis. I also have four properties: a home in Carlsbad, two rentals with about 200k proceeds if we sold them, and a second home in big bear that we Airbnb. I also have a line of credit of about 300k. I would love someone with some experience/success to help me better understand the best options. Being a Marine, I tend not to try and blaze new trails, but follow orders and do what works - then put systems In place to duplicate the process. I also have a good understanding of how to delegate and manage projects/people through my experience running my mortgage business. I’d love to try and transition into more passive income, and I like the concept of multi-unit because it’s more doors per residential loan, but am open to suggestions. Any idea of what strategies I should look for? Partnership opportunities that exist? Mentorship I could seek? Value I could add in terms of my expertise? Thanks a lot - Daniel Carlsbad, CA

I would love to do this on a bigger scale as well and specialize in the VA loan. Drop me a line if you can when you have some time. Trying to work out a way to get it figured out. Maybe two heads are better than one.

Daniel 

With rates where they are, my opinion is that the down payment doesn't do much for you, and that the cash in your pocket is more liquid, safer, increases your tax benefits, and probably has a better rate of return.  Invest it, keep it.  If there was a multiplier, i.e.: reducing the loan amount to below 417K, that is one thing.  But without anything like that, I would keep the cash accessible. 

That is my advice for 9 out of 10 clients after analyzing the numbers. 

Daniel Lehman

VA Expert/Advocate

Love the idea.  HOWEVER, want to clarify something.  You are not REQUIRED to live in the property for 1 year.  Obviously with deployments and PCS moves, that is not realistic in all cases...  It has to be a) FEASIBLE for you to move into the property in the first 60 days after close and b) It has to be FEASIBLE and you have to INTEND to occupy the property for at least a year.  If those intentions change, it is entirely within your rights to change the plan and no one will track you down, etc...  So I wouldn't worry too much about the year timeline unless thats the plan anyways... 

Love multi-unit with VA.

VA IRRRL's are legitimate, and appraisal value doesn't matter because you won't need an appraisal... In most cases, the concept of "Buying the rate down" is a property of how long you plan on keeping the loan. If you plan on keeping it long term, it may make sense, but don't fall in love with the lower rate unless you can justify the cost of the buy down over time. Typically on a 30 year it doesn't make sense to do AT ALL.

When looking at banks, understand the BOND MARKET moves rates, not the bank.  So watch the bond market and that will tell you market direction.  That being said, FORGET about closing costs (escrow/title/notary, etc)  Look at LENDER fees, LENDER cost/credit, and RATE.  Those three things ONLY will simplify your analysis a lot.  Don't worry about taxes, insurance, etc...  That will all be the same regardless.  Look at fees, cost/credit and rate together and weigh your options based on how long you plan on keeping the property... 

Make sense? 

Daniel Lehman

VA Expert/Advocate

Not sure - BUT - look into multi-unit. Use your VA eligibility to purchase a 4-plex instead of a single family and you will have an AMAZING asset on your hands down the road...

Daniel Lehman

VA Expert

1. How do I go about making my current mortgage into a regular mortgage (not thru the VA)?

- You would basically do a refinance to a conventional loan. That would pay off the VA loan, and you could then reinstate your eligibility with evidence that the loan was paid in full and use it again. Be careful of the "subsequent funding fee" though - you may want to put 5% or more down to reduce that from 3.3% to 1.5% if you are not service connected disabled...

2. If I do manage to do the above, will I begin to have PMI?

- Maybe, but only if your new loan is above an 80% loan to value. That being said, even if it is, MI isn't the end of the world, it is just a tool. If it helps you get the VA loan done, it may be a good deal for you.

3. The property I'm looking at is has 6 units, but two buildings (3 units in each). Are they treated as one whole building on a plot of land, or two separate Triplexes?

- Residential lending only goes up to 4 units max.  A 6 unit would be commercial.  So I am assuming that it is 2 tri-plexes, but you should be able to check the title for the zoning and property description to verify. 

4. Let's say I do have to have PMI if I don't have my currently mortgage as a VA loan anymore. My brother wants to start investing and we were talking about going in on a house together and he has never used his VA loan. Would we both be able to apply for a mortgage as a VA Loan with just him using it?

- Yes, you could use your brothers eligibility and you would be able to go on the loan ONLY because you are also a veteran. That being said, it would have to make sense that you would move in to the property together because VA is only for owner occupied properties. If not, just have your brother buy and you can go on the title with him after the fact if that makes more sense...

Hope this helps!  

Daniel Lehman

Jesse - Semper Fi!  Listen - you don't need 2 years in the same JOB, you need 2 years in the same INDUSTRY.  So, if you can connect your current work to the new position in some way, you should be fine even without 2 years.  HOWEVER, if you STARTED a business and are self employed, you also need 2 years self employment income to be able to calculate income... 

VA is the best deal around and the only thing that will get you 100% financing conventionally without Mortgage Insurance, etc... I am not convinced you CANT do it based on what you wrote alone, but let me know if I can help clear anything up for you. VA is VA. Guidelines are guidelines. Banks don't make guidelines, they just check your ability against them. That being said, most bigger banks don't hire good people. They don't have the money to spend on them. So people get bad advice. You may be able to get that done with a VA loan.

Daniel  

Two options... Think of your VA eligibility as a rechargeable battery... If you purchased a relatively small home (or did a small loan in relation to the max limit in your county) you may have additional VA eligibility left. If you don't have a sufficient amount left, you would have to refinance into a conventional loan, therefore your VA eligibility would be restored and you could move on from there... HOWEVER - keep in mind, all VA loans are owner occupied only. So you would have to intend to occupy the new property.

Thanks! 

Daniel

I saw that you have GI bill, which is an amazing VA benefit. The other AMAZING benefit is the VA loan. I would definitely start by purchasing a 4 unit property using my VA loan, rent out the other 3 and live in one unit... Once you have some equity built up you can refinance the loan, free up your VA benefit and do it all over again. Use that to supplement any other opportunity that exists...

Daniel