How I Built a $1.2M Portfolio While Active Duty With the Help of VA Loans

by | BiggerPockets.com

I proudly served 22 exciting years in the Air Force as a calibration technician and laboratory auditor. It provided some of the best experiences in my life. Still, halfway through my career, real estate became more attractive than my military education and training. I began to purchase homes as I moved through assignments and always enjoyed talking about real estate investments. While I loved my country and was proud of my military service, it was easy to see that I had a second agenda in real estate. The military and real estate investments have provided security for my family, and I hope this article will teach other veterans of the opportunities to provide additional security for their families.  

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Growing Wealth Through VA Loans

After approximately 10 years in the Air Force, I bought my first home with a VA loan and became intrigued by the success and growth of the housing market. After a divorce, I needed financial help and began renting (house hacking) my master bedroom for approximately half of my mortgage. It was a huge financial relief and a learning lesson for the future. I also needed to refinance my VA loan to remove my ex-wife from the loan. I refinanced to a conventional loan and unknowingly restored my VA entitlement to use again.

[Note: For the purpose of this article, I’ll use the word “entitlement.”  The VA loan “entitlement” is actually a loan guaranteed by the Veteran’s Administration. This enables the veteran to purchase without a typical 20% down payment or private mortgage insurance (PMI).]

Within any military service, there’s always a sense of pride and motivation for service members. Members are encouraged to compete for monthly, quarterly, and yearly performance competitions. Winners often get promoted at faster rates, and as we all know, promotions bring more money. It’s easy to see how members could easily become focused on the military career ladder and have little room or desire for anything else. I sometimes felt guilty for pursuing other opportunities while I was on active duty, but in the end, I continued what I loved—learning and pursuing real estate opportunities. While others studied for promotions, I focused on purchasing other investments or completing renovations.

During my military travels, I would often read books about real estate investing. I learned that some people truly hustle to make real estate deals through owner financing, flipping, the BRRRR strategy, and wholesale deals. However, I thought I could not perform such acts while working in the military as a traveling auditor. I could not learn the processes or meet the right people to successfully invest in real estate as other people have. I was far too busy. After a few months, I finally realized I already had the best opportunity of all! I was a veteran, and I could invest with VA loans. Approximately one year after the realization, I purchased a 3,000 square foot duplex with a VA loan. Three months later, I received an assignment and repeated the process to purchase my sixth home.  

MSgt DeChon, proud to serve!

Before I jump into the key points of the VA loan, it’s helpful to understand the VA loan as an entitlement. Currently, the entitlement in most areas is $424,100. However, this entitlement increases in expensive areas. The area with the highest entitlement is $721,050. This means you can have a loan up to the maximum entitlement—or several VA loans up the maximum entitlement. There is no limit to the amount of VA loans a veteran can have.  

Funding Fees for VA Loans

Unfortunately, there are funding fees for VA loans, as seen below.

Funding Fees
Type of Veteran Down Payment First Time Use Subsequent Use for Loans From 1/1/04 to 9/30/2011
Regular Military None

5%-9.99%

10% or more

2.15%

1.50%

1.25%

3.3%

1.50%

1.25%

Reserves/National Guard None

5%-9.99%

10% or more

2.4%

1.75%

1.5%

3.3%

1.75%

1.5%

10 Key Facts to Know About VA Loans

Here are some of the key points to remember for VA loans:

  1. You can have more than one VA loan.
  2. You can buy up to a 4-plex with each purchase.
  3. You can purchase only one additional time using a VA loan if it’s considered an upgrade from the first and if it’s in the same commuting area.
  4. You can purchase again if the purchase is outside the area of the original purchase, and it does not need to be an upgrade.
  5. The entitlement increases in more expensive areas.  
  6. After purchasing with the VA loan, you are required to live in the home for one year (see also #7).
  7. If a new military assignment is received before the one-year live-in period, you can purchase again within a year of the previous purchase at the new assignment location.
  8. These benefits continue for retirees. For example, a retiree can purchase two times in any area—or more outside of the original area—until the entire entitlement is used.
  9. Current loan limits can be found here. When reviewing loan limits, veterans must only use the values that apply for one-unit family homes (even when purchasing a multifamily home).
  10. With every new loan, applicants must have enough money reserved to cover at least six months of mortgage payments for each loan they already have. For example, if you have three loans and each mortgage payment is $1,000, your monthly payments are $3,000. For a six-month reserve, you must have $18,000 ($3,000 x 6) available to apply for a new loan. However, this requirement may change depending on the lender.  

So, let’s look at this from a different perspective. Currently, I have three VA loans. Two loans were acquired in single commuting area. My third VA loan was acquired approximately 1,000 miles away, when I received a new assignment. I have no further VA entitlement remaining of the $424k. However, if I moved to an expensive area, I could purchase again with the VA loan program. 

For example, if I used all of my $424k entitlement my current area and moved to San Diego (a more expensive area), I would have approximately $212k remaining on my entitlement. The maximum entitlement in San Diego is $612,950. Therefore, we could strategically move to an area where VA entitlement is higher to make another VA investment. Still, it’s a good idea to always consider your loan options. A conventional may be a better option based on your situation.

Home Loan: Liability or Asset?

Here’s a key point when qualifying for loans: A home loan is considered a liability. You must be able to pay for the all of your liabilities when seeking a new home loan. But if the home is rented and the income is more than the mortgage payment, it’s no longer considered a liability! The rental income contributes to your debt-to-income ratio. You don’t need additional military/job income to qualify for a new loan. Therefore, you must prepare to qualify for a home loan by finding renters before qualifying for a loan. In nearly every home I’ve lived in, I prepared the home to be rented and had renters in place or contracted before I applied for my next loan. This made qualifying a snap! After all, I was in the military, and I knew a move would be coming soon. So it was best to get the house ready to be rented and prepare my finances for the next loan.

It also goes without saying that military life is very hard on families. Divorce is an unfortunate reality for military members, and they often must pay child support or alimony while they defend the country we all love. Little money remains for savings, growth, or retirement. I was in this position! After 15 years of service, I had no savings or 401k, but instead I had tenants paying my mortgages. To my surprise, my net worth and responsibility quickly surpassed those of the of my military coworkers and commanders.

Related: VA Loan Rules: What is a VA Non-Allowable Charge?

Maintaining Houses From Abroad

I’m not the average homeowner, so please understand what I do before you jump in with both feet. Unlike other investors, I have rarely paid for management. First, I paid my son to communicate and check on the properties occasionally. Later, I paid a friend during a two-year period because I was reassigned out of the state. Both managers were not experienced and were paid 50% of what professional managers are paid. For the most part, I managed all repairs and communicated with tenants myself but needed someone to stop by the homes occasionally to give me advice.

In most cases, it’s probably best to leave the management to a professional. Also, it may not be legal to leave an area without hiring a professional property manager. Most owners would not manage properties while living in different states as I do. Therefore, I don’t recommend what we do.  

It’s my opinion that managers are overpaid. Tenants call me directly with problems, and I’m just as capable of calling a repairman or making purchases as a professional manager. We’ve all heard stories about tenants trashing houses and skipping out in the night without paying rent. Tenants are going to do what they do even if professional management is used. In fact, I’d be very disappointed if I paid a manager and learned my house was trashed. Without professional management, I can pass the savings to the tenant, which motivates them to stay longer. In some homes, I’ve purposely kept the rent low, and I’ve had the same tenants for five years in two homes. In these homes, I also have a Homeowner’s Association (HOA). They come to inspect the property every month for weeds or other violations. Half of the management responsibilities are completed by the HOA. For the other homes not managed by a HOA, I take a more active approach by visiting the homes regularly.

I would not purchase homes outside my commuting area; however, I have never shied away from purchasing a home after being reassigned to a new area. I’ve taken every opportunity to buy another home when I’ve had the chance. If renting is not immediately profitable, I gauge at the long-term outlook. For example, if I have to pay $100 out of my pocket every month when renting, I would still get the loan. I might pay $18,000 over the long run, but the equity could be greater than $150,000.

Also, rent has been increasing, so I don’t worry about any immediate losses. It may be too risky for some, but it’s been working for us. Many people aren’t willing to look at the long-term, and they often get scared. I believe the fear and short-term outlook greatly contributed to the housing bubble bursting in 2007. Even through the housing bubble, I’ve never sold a house or foreclosed, despite when the odds were against me. I urge everyone to stick it out and make it work when fear begins to build. See the many opportunities houses can bring (such as renting, AirBnB, or house-hacking) and maximize the investment for you!  

A Little Bit About My Process

I typically perform live-in flips as I move from house to house. I did not intend to work on houses, but I’m always willing to perform repairs and upgrades as opportunities present themselves. This makes for a reliable home and reduces my management effort. It also boosts property value and rent, attracts better tenants, and enables tax deductions through depreciation.  

When you’re living in your home, always have a plan to move out of it. At one location, I was especially concerned about the low rents and a high 15-year mortgage payment. Therefore, I worked especially hard to make the home perfect—and it worked! I had the highest rent in the area and prevented losses. Prospective tenants were knocking down my door. After only three years, the house has $40k of equity and great tenants. With new tile floor, granite countertops, and beautiful bathrooms, it was rated as the number one rental house in the area (according to Zillow). Therefore, I always recommend caring for your home and your investment. Performing the work yourself is not necessary, but it certainly helps to keep costs down.  

Related: Military Members: Yes, You Can Use Your VA Loan More Than Once. Here’s How.

The Trashed House We Restored During Christmas Vacation

During one Christmas break, we learned that tenants moved out unexpectedly. We needed to act fast to get new tenants, but the house was trashed. We decided to drive 1,000 miles to perform all repairs ourselves. After all, there was no chance of finding help during the Christmas vacation, and we had the means to do it ourselves. After the long drive, we cleaned and painted the entire house and installed tile floor in the master bath and kitchen. We also upgraded the wiring in the master bath for better lighting and had the carpets professionally steam cleaned. It was a tough way to spend our Christmas vacation, but we were extremely proud of ourselves afterwards. We drove home with a newly signed lease agreement, and all was well. I was ready for duty after my “vacation.” This lifestyle may be tough or unapproachable for busy military members, and  I don’t expect for others to repeat my process. This is why I’ve always considered myself to be a hard working person who will soon have his money work for him.

Here are a few renovation pictures.

Before Renovation

Before: large window in tub, no light switch on wall, no fan, bad subfloor.

Before: dark and outdated.

After Renovation

After: reduced window size, everything is new!

After: painted cabinets, new microwave and fridge. New lighting and tile floor, new sink and faucet.

After: new tile floor, switches, knobs, and lights. Accented orange wall brightens the room.

After: small bathrooms have full features—tile floor, new toilet, new vanity and faucet, full length mirror, and double lighting fixture.

After: painted brick, concrete, and wood beams. New tile and painted red door. Resurfaced wood floor.

During my travels, I have influenced many veterans to make multiple real estate purchases, and I have absolutely loved hearing their success stories. Often, veterans would invite me to the homes or show me pictures after my advice changed their lives and financial futures. So, I thank all veterans for serving and sacrificing, and I urge them to take full advantage of the opportunities given to them. At the time of my retirement, I owned six rentals in three states. Within one year after military retirement, I purchased three more homes without help from the VA program. With a portfolio of $1.2M, I consider myself retired, but I love what I do! My next step is to purchase a multifamily property (approximately 25 units) while renovating it. I’m hopeful I’ll be able to use the equity from previous purchases as a down payment and perform a 1031 exchange.  

Thank you to all who have served and given so much for the defense of our country. I hope with this information, you’re able to care for yourself and your family to the best of your ability. I salute you and thank you for your service! Grow and live the lifestyle you deserve.

For more information about VA loans, click here.

[Editor’s Note: We are republishing this article to help out our newer readers.]

Any questions about VA loans? What has your experience with this form of financing been?

Leave your comments below!

About Author

Darrell D.

Darrell is a military retiree who maximized VA loan benefits as he moved between assignments. He’s currently using the BRRRR strategy on single family homes and seeking 1031-exchange opportunities for an apartment complex in the Dayton/Columbus area. He enjoys a hands on approach to renovation and management.

122 Comments

  1. Jessie Nunley

    Sir,

    I absolutely loved your article. My fiancé and I are saving money to start investing gin real estate. We are both active duty Air Force (SSgt, TSgt) who will be transitioning into the Guard/Reserve within the next few years to pursue other dreams while investing in real estate along the way. Thank you for writing this article. It has heightened my desire to start investing sooner rather than later!

    • Darrell D.

      Glad to hear it. You’ll enjoy real estate together. It really brings passion and excitement to a marriage. My wife and I were joking tonight about all the silly pictures we’ve made during renovations and moving. We might post in the forum something a little more fun.

      Let me know if you have questions.

      • Herson Larin

        Hi Derrell so my question is, was there a fee added into your loan for using the VA loan your second and every time after? I asked because I used it twice in the same city but the second time there was a 5k fee added on top of my original home loan amount that I needed. Thank you

        • Darrell D.

          You’re correct. The fee is also mentioned in the article and also depends on status: Active, Reserve, or National Guard. It much lower than the 20% down payment or 10% down payment plus mortgage insurance. I’ve never regretted paying the fee and it’s much faster to grow with VA loans when you have you have limited cash on hand.

  2. David Krulac

    Darrell,
    Thanks for your service, great work on your home acquisitions, and getting the word out on the value of the VA loan, I had 6 of them myself, but that’s another story.
    Best wishes,
    David Krulac
    Bigger Pockets Podcast #82

  3. Charles Williams

    Darrell,

    Fantastic article. Proud and happy for you. I live in the Norfolk, Va area and we have a ton of military personnel here. I workout at a CrossFit gym that is loaded with active duty Navy and Coast Guard people. This article is such great timing. Just today at the gym this young couple approached me, he just retired from the Marines and asked me to go out with them to dinner soon and help them get started in real estate investing. I will definitely pass your article along as their first assignment to read. I love the idea of you wanting to get into multi-family. I started out as you with single family homes then quickly migrated to duplexes, triplexes, quads, and now larger properties. I think you will find multi-family 5 units and larger is the way to go. Good luck and keep it up!!

    Charlie

  4. Darrell D.

    Thank you everyone. I have to say I’m excited to see the article here. I’ve read many articles and success stories so it feels good to contribute.

    @Charles Williams. BTW I was last stationed at Langley. We do miss VA. It was rich with history and we also loved biking the Williamsburg battlefield and running on Nolan Trail. Also check out the Home Emporium in the Norfolk area.

  5. John Murray

    Thanks for your service, I served with Tropic Lighting. I never used my VA loan, I have 8 SFH in metro Portland Oregon. I’m into the BRRRR thing with $3M leveraged and $650-700K of my own skin in the game. Makes me think I should contact Oswego Mortgage and get 100% of the present house and pull another $200K instead of refinance 2 of my rentals and only pull out $150-160K. I was an E-5 over 2 and barely made $450 a month, a lot has changed since I was 20 years old. One shining grace, my last year I was rec services Fort Derussy Waikiki Beach and a lifeguard on the most popular beach in the world. I had the Vietnam GI Bill and got edjamacted.

  6. mary mcallister

    Thank you Darrell. This was a very well-thought out and informative post. I will be forwarding it to a good friend of mine, retired from Marines & Army. I’m sure this can help guide him in his journey to buying property.
    Good luck to you in purchasing the multi unit property, I’m sure you’ll make it happen! Thank you for your service.

  7. Chris Ayers

    Great story. I work in the DC area and have worked with tons of military people in my day.

    Your VA loan is not and should not be considered an “entitlement.” They are benefits for work and service performed for this country. They should be grouped together with your B&H and retirement.

    Keep up the good work.

  8. Susan Maneck

    VA loans are definitely the best deal out there. One question I have, though. I know Fannie Mae doesn’t like you to have more than four mortgages total. Can you go past the four mortgage limit with the VA if it still totals less than your max?

    • michael kimmell

      You can have 10 but a lot of backs stop lending to you at 4 plus the one you live in. Some big loan companies go up to 8 but after that is tricky. So you are allowed 10 but I don’t know who will lend you 9-10. It’s kind of a catch 22.

    • jorge guadian

      I was miss informed and didn’t really do any research of my own so its my own fault about VA loans. I was told and had the misconception you could only have oneVA loan at a time and once you paid it off you could reuse VA entitlement. For years I accepted that is the truth thanks for sharing your experience with all of us. My experience so far even though I haven’t used the VA loan as much has been a positive one.I was also in the military and now retired since e 2006. At my 10 years mark in the Army I returned from Germany. I decided I had to make more income some other way, with 2 kids and a wife and being a Staff Sergeant in the Army was ok but I wanted to give my family more and also have some other retirement income for the future. I saw this investor Donald Sheets informercial on TV and ordered his program. I started on a fast pace and thought wow this is easy. The 1st duplex was a 2 bedroom I purchased in 1996 it was a FHA loan we lived in that duplex for a year. In 1997 I used my VA and built a 3 bedroom 2 baths we lived there for 8 years. I had our 4 bedroom 2 bath home bulit we now had 3 kids. I paid off the 2 duplexes one in 16 years and the other in 20 years. I tried to buy another investment but got shot down on the financing every lender would say my income to debt ratio was to high. I should have never bought a new 16k boat. Cash flow is were you want to be and not having a mortgages is peace of mind. Plus I saved on thousand of dollars on interest by paying them two first duplex off. After I retired from the Army I worked for 10 years 100% travel in the oil/gas/power industry making decent money. In Oct 2016 I resigned at the age of 52 from my job. In the same year 2016 I purchased 2 duplexes using conventional loans. In 2017 I purchased another duplex. Presently I have a deal on the table hopefully will close on February 2018 this will be my 6th duplex. Just a note I have 4 loans counting my home which is a VA. My lender I have been doing business with requirements are on downpayment is 20% on 3 loans or lest. 25% 4th loan, 30% for your 5th and above. I don’t have a problem with that on the last deals three deals everything has went smoothly with this lender. I guess other lenders have there own rules and requirements Im staying with this one .Real estate is the key you don’t need a degree just some common sense and financial discipline and this Bigger Pockets site is a great place to get educated from regular Joes and Janes starting from the ground floor. Darrell. D Thanks again for the interest rat is right on. Darrell your article is an outstanding way to help out all military members that are looking for other way to live financially independent while active or retired. Thanks

  9. Derek Caffe

    Hello Darrell, first off, great article! Second, I’m a medically retired Army veteran that purchased my first duplex with a VA loan in Georgia for $110K (just under 3 years ago). Do you mean to tell me, since I have not used my full entitlement I could purchase another 2-4 unit property with the remaining entitlement, while still owning my first duplex under a VA loan? Thanks in advance for the info.

      • justin webster

        I just used Va loan to buy a duplex but I was told you have live there 3-5 years before moving. Where do you get info that it’s only a year? Also did you refinance out of VA before you went for the next one? I would have asked Darell these but he’s getting a lot of other questions

        • Darrell D.

          Not everyone knows the VA system. In fact I think some people tried to tell me no just because they didn’t want to do something different (a VA loan instead of a conventional loan). I would challenge them and push them to seek guidance or talk to their supervisor. If they quote the VA guidelines verbatim, it’s probably real. Or try another lender.

        • michael kimmell

          I never have seen the 3-5 year rule. I also have never seen the one year rule in writing.

          But yes you can use the loan more than once. You can barrow up to the 400-700k limit (it depends on your county). You need to live in the buiding after you close. I recommend you have lived in the old one for atleast a year or have a really good reason why you are moving (like a transfer). But I have a broker friend who told me he did one for a guy 3 months after the first one because they found out twins were coming.

  10. Matthew Zimmerman

    “If renting is not immediately profitable, I gauge at the long-term outlook. For example, if I have to pay $100 out of my pocket every month when renting, I would still get the loan. I might pay $18,000 over the long run, but the equity could be greater than $150,000.”

    That’s freak’n brilliant! Good stuff!

  11. Jessica L Renard on

    Looks like you did a good job. Some folks in the military are afraid of using their VA loans and it’s pretty designed to keep it modest. It’s not that different from conventional lending, and more limited, when you are speaking of building a portfolio of rental properties for yourself. Can see how many duty members misunderstand their thresholds. Be well.

    • Darrell D.

      I think the biggest limitation is that buyers need to live in it for a year. It’s a small price to pay IMO when seeking retirement and independence. It many situations it’s all that is needed to get the snowball effect. I would say the biggest misunderstanding is that they don’t know they can use it more than once. So they wait until they find the perfect home, usually at retirement.

  12. Joel Hill

    Great article.The best run down I’ve seen of VA loan rules. I will definitely be sharing this the folks at my squadron. I think something good to touch on is that you can make a larger down payment if you so choose to with a VA loan. I did not and have a higher mortgage payment as a result, and that cut into the cashflow. Live and learn.
    Thanks for the article.

    • Darrell D.

      Very true. Also service members can put money down to stay within the maximums. Many investors are putting the minimum down which allows them to purchase again. For example, I purchased my current home with 10% down. Afterwards I purchased two small houses ($25k each) with cash and now they’re renting for $700 each. This pays for the mortgage payment on my home which is a 15 year mortgage. Instead of one investment, I made three and my home is paid for.

  13. Jermaine White

    Darrell,

    Well put together article, I thought I knew a decent amount of information about the VA loan. You made some good points in your article. I tell you if I could go back in time to when I went too my very first command, I would have told him to buy some real estate. Several times I heard of folks buying, but my excuse was oh I’m too busy studying or trying to go to school, or what happens when I get orders. I really wish I would have just taken the plunge and just figured it out, I think I would have been the more wiser for it. Anyway I’m retired so now I’m fresh out of excuses, and your article just gave me a much needed push.

    Thanks !!!

  14. Paul Willard

    #6 regarding living in the home for a year is FALSE! You’re required to move in to the home for personal use, but there is no time requirement. The one year myth is often caused by miss information. I believe it originates from recommendations for not being flagged for potential mortgage fraud.

    Source: friend is loan officer specializing in VA loans.

    • Darrell D.

      Good work Paul. I hope you’re right. I heard “one year” so many times that I took it as truth. I also heard about “intent.” For example a person should intend to live there for a year unless something happens like a new assignment or relocation.

    • michael kimmell

      I concur. The one year is a good rule of thumb but I have never seen it and writing. Other than you have to live in he home after you buy it, the amount of time is vague. I might be wrong but I looked into it hard and never found it. A broker friend told me he has never found it either.

      • Richard Humphreys

        Good back and forth between Darrell, Michael and Paul on the
        “1 year rule. “Gentlemen, based on your give and take with each other, what’s your advice for a person contemplating a VA fourplex purchase who lives in a high cost metro area and plans a purchase in a lower cost metro area at least a thousand miles away. Is a wholesale move across country required to comply with the rule?

        Thanks

        Richard

  15. Brian Dalton

    Hi Darrell, thank you for writing this article. My wife and I are investors here in Northern NJ, and we used my VA loan to purchase out primary residence 5 years ago. While I wouldn’t really want to refinance out of the loan at a higher rate (we’re paying 3.75%), upon reading your article, doing so makes sense so we can reuse it to purchase more property. I’d love to connect with you to discuss the finer points. Please reach out when you have some time. Thank you.

    • Darrell D.

      My pleasure Brian.

      3.75 is a good rate. Could you use your VA loan again instead of refinancing? It may be a better option. Also looking at the all of the effects of refinancing. Your loan payment will increase and effect your debt-to-income ratio, making it more difficult to buy.

  16. Bryan Mitchell

    I’ve been in the military for over 22 years and I’ve never used a VA loan. Each time I was shopping for a loan on a new house, I found that the VA loan rates were slightly higher than conventional. Is this correct? Also, I always had 10-25% to put down on the properties. I wanted to put money down to have equity and thought that paying off a loan in 15 years was the way to go (or less than 30). Is it though? Would using a VA loan save me money on closing costs or other related loan fees other than PMI? Again, if I have the down payment and the rates are no better than conventional loans, why should I use the VA loan? Thanks.

    • michael kimmell

      Bryan,

      It depends how you look at the money and how you feel about cash flow. I have 5 mortgages with two VAs. I like 30 year mortgages with the lower payments. I then rent them out for a lot over the mortgage and get a good cash flow. Put it this way I cash flow about 30% over my mortgages (not counting the one I live in). I save up the cash for next investment. But I am almost up against my debt to income ratio limit so I will have to change my strategy a bit and start paying off a mortgage.

      • Patrick Y.

        I am considering buying my first property (duplex) with my VA Loan. One thing that I have found is that it is incredibly difficult to get positive cash flow if I use the VA loan if I have zero equity. How do you feel about getting zero cash flow using the VA loan vs putting money down with a conventional loan and getting some cash flow out of it?

        • Kevin Ross

          @PatrickYu can you find any stable, decent place to live rent free? If you’re buying a duplex and living in one unit while the other unit pays most of the mortgage, that’s an amazing deal! Once you move out, you’ll rent the second unit, then you WILL have positive cash flow to roll into your next deal.

  17. michael kimmell

    Good information. I have used my VA twice and am currently maxed out thanks to WA high priced market. I like using my VA but have found it hard to find the details when using them. A few of the bits of information here I even did not know (like the upgrade rule). I have a similar story and started buying up real estate in 2011. I was lucky in my timing but I just started grossing more from my rentals than I do from the military. So it can be done. Thanks for the good article and good luck.

  18. Adam Widder

    Darrell,
    Thanks for the great article on the VA Loan! It really simplified the process. As a young officer in the Army my wife and I are looking to see how we can use it for real estate investing as well.
    Thanks for your service!
    Adam

    • Darrell D.

      Keep up the good work and thank you for your service. There are many topics I wanted to write about. One of them is how brave young men and women are for being in the service. Many are scared or excited but without a doubt the military brings a passion to their lives. Real estate is very similar. When you take control of your life and do exciting things, you enjoy every minute of it… and it brings a certain passion to your marriage. I’ve heard podcasts where older couples (approximately 65 years of age) began investing a renewed a passion in their marriage. Good luck in your career and investments.

  19. Isaiah Burnside

    Darrell,

    That was a great article, I was a fellow Airman for 7 1/2 years and now I’m looking to utilize the VA loan for my first purchase. Your article was extremely informative and inspiring. Thank you for taking the time to break down the different aspects of the VA loan and showing how you’ve utilized this benefit in the past.

    • Darrell D.

      My pleasure Isaiah. There’s so many ways to work the options. Make it work for you. Use Biggerpockets to ask questions. It’s easier than you’d think. The hardest part is having a mindset to make the money work for you and it looks like you’ve already got it. You got this!

  20. Jason W Krystofik

    Thanks for sharing you story Darrell. Very inspiring!

    I am veteran living in the DC metro area and have recently purchased my first home using a VA loan. After reading your post, it’s my understanding that I could rent my home out after a year and qualify for another VA loan, assuming my first home is rented. Is that correct?

    I have one note to add pertaining to the VA loan funding fee: If you are a veteran with a service-connected disability of 10% or more, the VA funding fee is completely waived. Also, veterans and active duty service members do have the option to wrap the funding fee into their mortgage.

    • Darrell D.

      There’s a bit of a debate forming. It appears you don’t have to wait for a year to purchase again. The one year period may be a recommended time frame, but may not be required.

      If you rent your first home, it makes qualifying for a loan easier because renting will positively affect your debt to income ratio. If you have renters in place before qualifying for a loan, it will make the loan process easier. It never hurts to talk to a lender before you apply though to see what your status is with them.

      Jason that’s an awesome point about the service connected disability. I never realized that because I wasn’t retired yet. I read up on the guidance. When a service member applies for a Certificate of Eligibility, the certificate will show what they are entitled to. I am also receiving a service connected disability. So perhaps I can take advantage of this. Here’s some guidance about the subject: http://benefits.va.gov/WARMS/docs/admin26/pamphlet/pam26_7/Chapter2.pdf

  21. Doug Rodriguez on

    Darrell thank you for your service and article. I’m currently AD in the AF and have used the VA to purchase our homes. I really wish we could have kept the homes and rented them, but you hit the nail on the head, it is hard to maintain the homes while serving. Our current home we used the VA loan to purchase and plan to rent it out. Currently I am also saving for another SFH rental and hope to get my feet wet in real estate investing. From what I gather, I can use a VA loan to purchase another home? Thanks again!

  22. Ken Vingua

    Darrell,

    Great article with solid tips on how to maximize the VA loan. I am at 15 years of service now and have 5 rental properties in 4 different states and plan to continue acquiring more. I have only used the VA loan on my first purchased property 10 years ago. I will look into using the VA loan for my next purchase on what will hopefully be a small multi-family. Thanks for the ideas and inspiration.

    Ken

    • Curt Warner

      Hi Ken,

      I noticed you’re in Oceanside. We just did a seminar at the Legacy Brewing Company location in Oceanside. It was about using your VA Loan benefit to buy a home. Peter Van Brady literally wrote the book on the advantages of VA Loans (top book on Amazon in the VA Loan space). He specializes in helping Veterans and Military Families get the home they truly want… whether to live in or as an investment. He has 3 unique programs you won’t find anywhere else, including using his own money to buy the house for cash and to fund the renovation. Then he’ll transfer it to you using your VA loan. You end up with a fully custom renovated home with zero down and zero closing. Check out his site – http://www.SoCalVAHomes.org. He’s planning another event at Legacy Brewing on Dec 5th and one at Stone Brewing on Dec 4th. Come out and get a free beer (or two) and free pizza. He can definitely show you how to work the 4-plex angle too.

  23. Allan Rosso

    Darrell,

    I was hoping you could clarify what you mean in your key point #8 “These benefits continue for retirees…”. When you say retirees, do you specifically mean people that have done their 20+ years and actually retired, or does it include people that have separated before the 20 years (lets say, after their first enlistment for example)?

    • Darrell D.

      Hey Allan. It was good to talk to you today.

      In step #8 I simply meant that all veterans who have VA benefits can apply for a VA loan. It doesn’t matter if you served for 3 years or 30 years. It was misleading and thanks for pointing that out.

      • Allan Rosso

        Ok perfect, thanks for the clarification. I figured I might not be the only one with this question.

        I definitely appreciate you taking the time to give me a call yesterday. If you ever need anything, or are in the South Georgia/North Florida area, don’t hesitate to reach out!

        Allan

  24. Robert Bates

    Hi Darrell,
    Thanks for the information, I’m a former marine. I have two duplexes one was purchased as with a VA loan, and the other with a FHA. My first question is can you purchase a fixer upper type property with a VA loan, and if you can, can you get funding for the rehab. My second question is how are you able to have 3 FHA loans.
    Thank you for taking time to answer so many questions

    • Darrell D.

      I seem to remember a VA loan with a rehab option. However I could not find the information today. I could be wrong. You might be better to contact the VA or a lender directly. If you find anything, please let me know.

      About the FHA loans. I misspoke. I have three conventional loans and three VA loans.

  25. Michael Rains

    Thank you for sharing your story Darrell. I’ve just hit 8 years in the Marine Corps but the thought of owning/renting property makes me nervous. I don’t know how people can handle the stresses of that and running a family.

    I’ve always wondered, though, how people go about paying for their home renovations in addition to mortgage payments?

    • Darrell D.

      Sorrt for the slow reply… I didn’t get into the big renovations until I was further along in my career. My first home was a new build and it didn’t need much. My second home took three years to complete because I did it when I wasn’t traveling. By that time I was an E7, living the dream.

  26. Jamal Hammett

    Thank you for sharing your story. I have owned a few properties during my time in the NAVY and currently only have one. I had a few single family and decided to liquidate and get all multifamily instead. I retire this December after 23 years and I’m looking forward to it. Congrats on all your success and I will you the best.

  27. Kurt Stevenson

    Great article! i hope to have similar success while i am active duty navy. I was fortunate to have a fellow senior enlisted member at my first sea command to direct my investing interests into real estate. I look forward to following in his and your footsteps!!

  28. Patrick Y.

    Darrell,

    I am considering buying my first property (duplex) with my VA Loan. One thing that I have found is that it is incredibly difficult to get positive cash flow if I use the VA loan if I have zero equity. How do you feel about getting zero cash flow using the VA loan vs putting money down with a conventional loan and getting some cash flow out of it?

  29. Capriis Anderson

    Thank you so much for this article. I purchased a condo with my VA loan and I learned that not everyone is familiar with the VA process. For example, the HOA has to be VA approved. My realtor and I was unaware of this and I made an offer on a condo that was not VA approved! Im hoping to rent out my condo and purchase another property using the VA loan. This article was very helpful in planning a long term strategy. Thank you once again.

    • Darrell D.

      Excellent! I’m happy to help. It always helps to have a renter in place before applying for the next loan. Unfortunately this process forces you to find an alternate home for yourself. That’s when friends and family help a lot. Having a renter in place will convert your home into an asset and your debt/income ratio will be noticed by the bank. Good Luck Capris!

  30. Darrell D.

    Thank you Hauheng.

    Many people put the minimum down on houses so they can use the money a later time… perhaps on another investment in the future or to get a house ready to rent. It would seem the only wrong way is not invest at all. Thank you for your service Hauheng and good luck.

  31. Dave Toelkes

    When I was in tje Army more than 30 years ago, I was told that I could have only one VA loan at a time. To purchase my second home with VA financing, I had to refinance the first home with conventional financing or sell the property to have my entitlement reinstated. Have the rules changes since I was in the service?

  32. jorge guadian

    I was miss informed and didn’t really do any research of my own so its my own fault about VA loans. I was told and had the misconception you could only have oneVA loan at a time and once you paid it off you could reuse VA entitlement. For years I accepted that is the truth thanks for sharing your experience with all of us. My experience so far even though I haven’t used the VA loan as much has been a positive one.I was also in the military and now retired since e 2006. At my 10 years mark in the Army I returned from Germany. I decided I had to make more income some other way, with 2 kids and a wife and being a Staff Sergeant in the Army was ok but I wanted to give my family more and also have some other retirement income for the future. I saw this investor Donald Sheets informercial on TV and ordered his program. I started on a fast pace and thought wow this is easy. The 1st duplex was a 2 bedroom I purchased in 1996 it was a FHA loan we lived in that duplex for a year. In 1997 I used my VA and built a 3 bedroom 2 baths we lived there for 8 years. I had our 4 bedroom 2 bath home bulit we now had 3 kids. I paid off the 2 duplexes one in 16 years and the other in 20 years. I tried to buy another investment but got shot down on the financing every lender would say my income to debt ratio was to high. I should have never bought a new 16k boat. Cash flow is were you want to be and not having a mortgages is peace of mind. Plus I saved on thousand of dollars on interest by paying them two first duplex off. After I retired from the Army I worked for 10 years 100% travel in the oil/gas/power industry making decent money. In Oct 2016 I resigned at the age of 52 from my job. In the same year 2016 I purchased 2 duplexes using conventional loans. In 2017 I purchased another duplex. Presently I have a deal on the table hopefully will close on February 2018 this will be my 6th duplex. Just a note I have 4 loans counting my home which is a VA. My lender I have been doing business with requirements are on downpayment is 20% on 3 loans or lest. 25% 4th loan, 30% for your 5th and above. I don’t have a problem with that on the last deals three deals everything has went smoothly with this lender. I guess other lenders have there own rules and requirements Im staying with this one .Real estate is the key you don’t need a degree just some common sense and financial discipline and this Bigger Pockets site is a great place to get educated from regular Joes and Janes starting from the ground floor. Darrell. D Thanks again for the interest rat is right on. Darrell your article is an outstanding way to help out all military members that are looking for other way to live financially independent while active or retired. Real estate is the one key to financial independence, you don’t need a collage degree just common sense and some financial discipline Thanks

  33. Curtis Clouden

    Great article. I currently has two property i purchase using the VA loan. I am currently renting one and living in the other. I plan to refinance them into conventional loans and continue to build my portfolio. It’s a slow process, but my goal is to own 10 rental properties before i retire from the military.

    • Darrell D.

      Sweet. After you refinance, are you going with more VA loans? Also do the VA loan benefits outweigh the cost of refinancing? I suppose it does. Don’t forget to have enough funds on reserve for each property. Good luck.

  34. Chris Watson

    Had to laugh we too spent a Cbristmas break repairing a va home in Florida while being stationed in California. In the military we are use to putting in 20hr days 4 or 5 days straight. I never knew someone could break the front glass of an oven till then.

    My real estate will make more than my Major’s pay by next year. I laugh because real eatate is a hobby that pays and my future retirement pay seems more of a safety net than a necessity to live on.

  35. Erich Reed

    Darrell,

    Great read and thanks for the advise! My fianceé and I are on fourplex number two and looking for the next project. Have you ever figured out why there is a Four-Unit limit column on the VA Loan Limit list if it’s not used?

    • Erich Reed

      Darrell,

      After my post yesterday, I realized this was my first comment on a post ever. 🙂 I’ve been reading articles and listening to the podcasts for a while now and just hadn’t been inspired till now. For that, I thank you. haha! You had me on a quest yesterday and today. Turns out I saved near $11K on my last purchase due to my status as a disabled veteran. WOW!

      Back to the question at hand…

      I understand the part about 4-plexes being the maximum size of multifamily homes that are eligible to be purchased with a VA Loan. The real question for me is, what is the One-Unit Limit, Two-Unit Limit, Three-Unit Limit, Four-Unit Limit columns for in the document you posted (FullCountyLoanLimitList2018_HERA-BASED_FINAL_FLAT.PDF)? In the loan limit document, it goes all the way to $1,307,175 for the Four-Unit Limit column for my “county” Anchorage, AK. I’m really curious why this is there… Could it be your increased entitlement to purchasing a second, third or fourth property? I need to know. lol! I’m on the road for property number two on my VA and I have a meeting with my lender to discuss refinancing as an option to free up my VA. If there is a way to not incur more refinancing costs at the moment though, that might be optimal.

      This is great! Thanks again Darrell!

      Regards,

      Erich W. Reed

      • Darrell D.

        I didn’t see your reply until now. Sounds like you were bitten by the bug just like me.

        Unfortunately we have to use the loan limits for a single family home, but we can buy a 4-plex with it. So disregard the other columns. It stinks I know.

        I would move to Alaska for a million dollars! Ha ha. I was there for a week in the Summer and it was beautiful. Maybe I can buy a Summer home. Hmmm 🙂

        Darrell

  36. Hello Msgt Darrell D,

    I appreciate you posting this article it was very insightful. I am am an AirForce Reservist and recently bought a home with the Va loan a few months ago. This articles really opened my eyes up to how many different ways you can utilize the Va loan to help with your real estate investing, and I am very interested in learning more about this topic. Thank you for sharing this information and I will definitely be applying this info to my investment plans. Thanks again!!

    • Darrell D.

      My pleasure Bandon. I appreciate that you recognized my rank. The benefits have been there for a long time but if we change our way of thinking to maximize them for us, we’ll be in a much better position. When it clicked for me, it opened my eyes as well. Good luck!

      • brandon lewis

        I definitely agree with you sir, and I feel that information like this creates so many opportunities for people to better themselves and be successful. Its very important to have a guideline like this to help you tap into your resources and maximize your benefits like you said, and I wanted to ask you a question about on HOA managing your properties. I know you said they are good to use to help keep your rental properties looking good, but I wanted to know if there was a situation where your tenants didn’t keep up with the property and HOA issued a fine for it, would you be responsible for the fine or would the renters be. Have you ever experienced this before? That is just something I was thinking about and wanted to know if you could give me some info on that. Thanks again for your time!

        • Darrell D.

          Not a problem. I have paid an HOA fine caused by my tenant. I voiced my displeasure and told them it would come out of the deposit. Since then it’s been quiet. The HOA rules are referenced in the lease agreement. I always include some wording from local laws and the HOA. I believe it beefs up the agreement and makes it appear more professional.

  37. Jerritt Larson

    So I can’t seem to find the answer to this in any of the other questions, so there is upwards of $400k available. Say I use an even $100k of that, buy a duplex, rent half of it out, deploy a couple years later, rent the other half out and when I come back use my big chunk of deployment money to pay off the whole thing, does it reset to $400k in that area to buy another place? Or does it still fall under the same rules of not being able to upgrade and such and I now only have $300k to use on the next one and then follow on, say I get PCSd, I now have another $400k in that new area even if I’m still paying on the other one?

    • Darrell D.

      Hi Jerritt. If you pay off your VA loan, the entitlement will reset back to the maximum for the area. And the opposite is true. If you don’t pay off the loan, the entitlement will not reset.

      One thing to check on with VA… if you partially pay off your loan, will the entitlement increase for every dollar you pay off your loan? I’m not sure about this. If you find out before I do, please let me know.

      Good luck

      • Jerritt Larson

        Interesting, so it wouldn’t be a terrible idea to flip a house every year and roll the savings into a 1031 (i think that’s what it’s called?) and then slowly build not only equity but potentially cash flow and a bigger rental unit say from a duplex to a 10 or so unit apartment building?

        • Darrell D.

          That’s my goal. I’ve been trying to position myself to jump into a multifamily. We can continue to grow and use our equity in the best way for us. And it could all start with a zero-down loan… how sweet is that.

  38. Jose Siandre

    I’m so kicking myself in the butt for being so ignorant about this strategy of using the VA loan this way that I’ve been entitled to for so many years! No better time than the present though! We’re in the process of refinancing our current home into our first VA loan. From there I plan on using the strategy you guys are talking about.

    My question is since we’ve lived in the home now since 2007 does the 1 year limit still apply?

    Also, has anyone used a VA loan to buy and rehab a bank-owned property?

    Best,
    Jose

    • Darrell D.

      Hello Jose.

      In the discussions above, a few people have noted there is no time limit to living in the home. You must live in the home with a VA loan but according to the discussion, you can leave any time.

      Quick question… Why refinance into your first VA loan? I’m assuming refinancing with VA will give you a bigger check when seeking the equity in the home you already have (100% financing instead of 80%). Can you refinance without a VA loan and save your entitlement?

      For example, refinancing with a conventional loan might give you $80k. Refinancing with a VA loan will give you $100k in your pocket. However if you use your VA entitlement, you might be using half of your entitlement ($200k for example). In this example, you’ll be trading an extra $20k for a $200k investment in the future. Am I on the right track?

      It seems posible to use a VA loan on a bank owned property. I was actually looking at REO properties today but I’ve never purchased in that way.

      Good luck my friend,

      Darrell

  39. Brian Garlington

    It’s interesting how the VA Loan works….I used it to buy a duplex in 2016 in Oakland, Ca. I get something in the mail at least once a week from different banks offering to re-do my VA Loan, etc.

    I’m in a position where I would LOVE to refi out of the VA Loan on the place I bought in 2016 without paying PMI (I don’t pay PMI now, so why start?) AND use the VA Loan again to buy another duplex, for zero down and no PMI.

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