All Forum Posts by: Jimmy Watson

Welcome back @Jimmy Watson

EOD as Landlord: If your tenants get out of line, you can remind them of HOW you dispose of explosive ordinance and remind them that you know where they park their cars!

(For those unaware: EOD in theater disposes of explosives using... more explosives.)

Anywho, have you given any thought as to how you will check this box from the VA Loan Manual so you can house hack (eg, buy an owner occupied multi unit using VA 0% down, and rent out the other units until you deploy, at which point you can rent ALL of them out)?

http://imgur.com/8errrow

Shortly after I started doing mortgages and getting interested in real estate I saw that little tidbit... aaaand I immediately found a BS source of minimal side income that on Schedule C of my taxes showed up as "Property Management Assistant." Boom, box checked.

$10k is insufficient capital to invest in an 8 unit site.

I would recommend looking in your area, I don't care where you live their are always good deals within a few miles of you. Worry about out of town stuff later, for your first time at bat keep the property to and under 30 minute drive. 

Concentrate on properties where you can get conventional financing, you have access to VA loans so use them. 1-4 units.

Your in the armed services, you know how their housing works, maybe cater to that market. That could be your profitable niche.

Concentrate on making the first deal a home run, don't just do a deal to do a deal. Make money off it, and use that as a spring board to buy the next one. Once you get rolling you can start to look at the commercial stuff.

PITI reserve is Principal, Interest, Tax and Insurance. A mortgage lender will require you to have six months, usually, of reserve of these four amounts before they will approve a mortgage on a rental property. Since this will be an owner occupy, meaning you will live in one unit, they may be flexible on the six month requirement, but that will depend on the bank. Navy Federal, USAA and other big banks, will not be. This is why I never use those banks for my deals. I always use smaller local banks. All deals are not "standard" for them, they don't treat every deal exactly the same.

I think you are on the right track with multi-family houses. If I had my druthers I would do the same, but my family situation is different. My opinion would be to limit your risk, at least until you pick up E-6 and start collecting BAH. For that reason, the less units would be better, two being optimal.

@Bryan C. is right about the TSP option but I would caution you to use this as a last resort until you get a bit more money invested in it. If you have 36K in it right now, you can only borrow 18K of it. The VA loan is a far smarter bet in your current situation. All of your TSP will count toward your reserve though so you will be covered for a mortgage as high as 450K. That doesn't mean you will be approved for a loan that high, just that your TSP will cover the PITI reserve for six months for that mortgage amount.

Another option is to apply for BAH Own right.  Unlikely, yes, but still worth a shot.  If you are in good standing, and have a smart plan, and good reasoning for needing it, it may be considered.  Wanting to buy an investment property is not a good enough answer, but wanting to generate supplemental income in order to pay for school in four years would at least open a conversation.  Food for thought.

What areas are you looking at?

@Jimmy Watson

I am in the same exact boat as you. I am an active duty Marine as well. I have used the buy and hold strategy since 2003 but have stuck with single family homes. I just closed on my sixth investment property in June and would love to discuss further if you like. I have used VA twice, FHA once, and conventional three times. The key is owner occupancy if you have limited capital to put down. I chose SFH because I have a family but I understand the profit potential is not quite as good.

Your TSP balance can be used to count toward the 6 month PITI reserve so ensure your broker knows about that up front, which is a major reason I try to max that investment out annually, and you should too!

I know your area well and shied away from it on my last tour, just PCS'd away in June, but only bc of my SFH preferences.

  Answer a couple of questions and I can help you more with specifics:

1.  When is your EAS?  Ballpark is fine, just give me an idea of how long you will be able to live in it before you PCS or get out.

2.  How long have you been in?  I won't ask your rank in the public forum but length of service will help me to understand a little better where you are at.  

You're definitely on the right track and asking good questions.  -Kevin

@Jimmy Watson: I am not sure if I mentioned in my post the amount of reserve money that we had to have in the bank. We had to have 6 months PITI in the bank, either liquid or semi-liquid (stocks/retirement accounts) reserves. For us that was around $36,000.

Best of luck to you! There is always a way! 

@Mathew Deines & @Nathaniel Johnson

Hey guys... looks like I just hit the same roadblock! Lender is telling me VA Limit is SFR column only.

Glad you guys benefitted... guess I'll have to let the O'Side Triplex idea go... bummer : (

They now also have the following disclaimer on the website:

PLEASE NOTE: For purposes of determining the VA guaranty, lenders are instructed to reference only the One-Unit Limit column in the FHFA Table “Fannie Mae and Freddie Mac Maximum Loan Limits for Mortgages Acquired in Calendar year 2015 and Originated after 10/1/2011 or before 7/1/2007”.

@Jimmy Watson, first, welcome to Bigger Pockets and more importantly thank you for your service Marine!!

If you are going to be stationed here for a few more years you should consider buying a property here with your VA loan. It's possible to buy a multi-unit property that you can live in and keep for as long as you want. Below I posted a link to a forum post started by @Mathew Deines about the multi-unit property he just bought in San Diego with almost nothing down. It's a great read and will give you all kinds of information about how he did it. Best of luck, Bruce

http://www.biggerpockets.com/forums/48/topics/2182...

Jimmy,

To start, the lower the amount of money you put down the lower the risk because if you loose the property for some reason you haven' t lost any of your money.

Getting in is difficult with no money down, though BP will make it sound quit easy.  I think this is relative.  For someone who knows the area and can do their own searching buying w/ no money down can be simple...still difficult, but simple.  

My suggestion would be to start small if you are going to invest here in SD.  I'd start with a 2 unit and get to know the ropes.  With your schedule it will be a balancing act.  Jumping in too deep with  8 units might be too much and will cost you more in the end.  

I had these three clients who were all in the military and were all friends.  They bought a 4 unit together.  One lived in it and the other two rented a place together elsewhere in SD.  They worked on fixing it up over time.  A little over a year later they called me saying they were ready to buy another property.  So we found a 2 unit.  The two that were renting else elsewhere moved into one of the units, rented out the other and then started working on fixing it up.  They are currenlty exploring the option of buying another one, but I suggested we wait because one of them might be getting stationed on the east coast.

I hope this helps.  Maybe this will spark an idea for you!

Karl

If you're looking to get started now, why not start with something you know something about now, military housing? I agree with your assessment that San Diego is too expensive and I think looking in the Southeast is a good idea. Our population and job growth is doing really well down here at the moment. Pick some bases in Florida or NC you could possibly be stationed at and look at off-base 2-4 units you could potentially owner occupy. Use a VA loan for low money down if they'll let you do that while you're on a ship.

Is there a place that you call home? where you have friends family and that you know people? Having a property manager doesn't solve all issues? I live in Knoxville, TN--- equals affordable. You really need to know an area before you spend money there. What neighborhoods are good- where the crime is? what is renting. I would start with a SFH just to get your feet wet and learn how to do things. If you are going to go to school in Florida I would think an university town like Tallahasee might be a good place.. student/ grad housing might be hot.. however IDK.. but on the coast- beach areas won't be affordable.