Any mentors on using VA loan to invest in real estate?

PFC Private RallyPoint Member — Sun, 11 Sep 2022 15:44:38 -0400

I'm looking for ways to increase my income rather than having to wait every two weeks for a paycheck which will then get destroyed in bills (have a relatively nice gas saver I'm paying for). I saw that real estate a good way to go via using the VA loan and I heard about some service members having 100+ houses over the span of their military career. Therefore, I was wondering if there were any mentors on here who have experience in such things. I'm a PFC and I'm in the Fort Hood area.

Thanks in advance.

Response by Cpl Vic Burk made Sep 11 at 2022 3:49 PM

Cpl Vic Burk — Sun, 11 Sep 2022 15:49:07 -0400

PFC Private RallyPoint Member I didn't know the VA did loan guarantees for anything but your primary residence. Maybe they have changed it since the early 1980's.

Response by COL Randall C. made Sep 11 at 2022 3:49 PM

COL Randall C. — Sun, 11 Sep 2022 15:49:14 -0400

Unless you buy the house to occupy and turn it into an investment property after you leave, you can't use a VA loan for it - VA loans can only be used for your primary house.

However, you can always become "a military slumlord" ... this is the term given to military folks that get assigned to a new location, buy a house, live in it, hang onto it and rent it out after they leave and repeat the process at the new duty location. Unless you have the resources to do it right now, that's probably the easiest way for you to ease into getting investment properties.

I would take that "100+ houses of the span of a military career" with a industrial size bag of salt. Is it 'possible'? Sure ... it's possible that a meteor will crash into your house as well.

Response by Sgt Private RallyPoint Member made Sep 11 at 2022 4:05 PM

Sgt Private RallyPoint Member — Sun, 11 Sep 2022 16:05:37 -0400

PFC Private RallyPoint Member I do not believe the story about anyone having100+ houses over the course of a career. Sure, some folks can make money in real estate. The question is, can you? Live beneath your means, save your money, and invest wisely.

Response by SFC Private RallyPoint Member made Sep 11 at 2022 4:10 PM

SFC Private RallyPoint Member — Sun, 11 Sep 2022 16:10:08 -0400

If you use a VA loan, the house you buy has to be your primary residence. You can't use it to purchase a property as an investment. If you want to develop properties with the VA loan you have to move in, use it as your primary residence, then pay the loan off completely to free up your VA loan. Then do it again.

Response by COL Randall C. made Sep 11 at 2022 4:28 PM

COL Randall C. — Sun, 11 Sep 2022 16:28:32 -0400

For the sake of argument, let's assume you've maxed out your pay scale (that's $2435.70 a month) and are single. BAH w/o dependents in the Fort Hood area is another $939 a month. You might have more income sources, but we'll just use those two. Average price for a 3 bedroom house down there is between 200k-250k (just a very quick search of properties around there .. adjust accordingly).

At 250k doing a 30 year VA loan with nothing down, you'll have a monthly payment of about $1850 or so a month. That's over 50% of your monthly income for that. Not many banks will give you a loan with that high of a Debt-to-Income (DTI) ratio. You can get a smaller house or buy in a 'less desirable' neighborhood (you know .. the ones where there are bars on all the windows), but you get the idea.

I don't want to scare you off from doing this, but you really need to be sure about what you're getting yourself into. I've had to eat nine months of rent from deadbeat tenants as well as put about $15k into repairs when I finally got them evicted. That's the nightmare scenario for landlords and it was only one of the many tenants I've had there (so I've actually had great luck overall) ... but if you're not prepared for something like that, it could destroy your "real estate mogul" dreams.

Response by COL Randall C. made Sep 11 at 2022 4:55 PM

COL Randall C. — Sun, 11 Sep 2022 16:55:37 -0400

If I were in your situation, the first thing I would be doing is living in the barracks and eating chow on a meal card.

Next I'd be maxing out the retirement savings (since you came in recently, you're under the new Blended Retirement System). If you can't max out (to the IRS annual limits), then AT LEAST get it to the 5% that the government will match.

After that (if you can max it out) I would then max out an IRA.

If after you've done those things THEN I would look at your current finances and see how much of a mortgage you could afford and if you still want to look at real estate investing.

Response by CSM Charles Hayden made Sep 11 at 2022 5:00 PM

CSM Charles Hayden — Sun, 11 Sep 2022 17:00:02 -0400

everydollar.com+dave+ramsey&t=ipad&ia=web PFC Private RallyPoint Member Please investigate the Dave Ramsey internet site for money management techniques. He prescribes ‘cash is king’ as a basic premise of personal money management.

Response by Maj Bruce Miller made Sep 11 at 2023 2:43 PM

Maj Bruce Miller — Mon, 11 Sep 2023 14:43:17 -0400

Much of our wealth today came from the VA guaranteed loan financed houses we bought when I was A/D. To be able to do this requires 5 things, at least in my experience...
1. PCS needs to be to a larger Metropolitan area. This likely won't work in small communities.
2. Upon notification of PCS location, do internet search for the real estate office doing the most listings and sales in the area you plan on living. Contact the most experienced agent in the office and tell them you want a list of the following: the most run-down houses in the best housing neighborhood.
3. On house hunting week, drive to all listed houses by yourselves. Find the worst ones in the best neighborhoods and contact the agent to show them. Make an offer on the crapiest one with the best potential.
4. For the next 3 years (assuming this is a 3 year assignment), work on rebuilding, adding on, refinishing, upgrading and otherwise improving the property. You need good mechanical skills here. Paying other subs to do the work is simply too expensive.
5. At next PCS, put the house on the market a couple of months in advance at fair value and keep fingers crossed that it is not during a recession period or period of high interest rates, as it is now.

Invest profits in an S&P 500 index fund at a self-service brokerage like Schwab, Fidelity or Vanguard, and leave it alone.

Rinse and repeat.

In hindsight, I'm not sure I'd go this route again. Lot's of risk and having to live in dust for so long. But hey, I was a young Lieutenant/Captain full of piss and vinegar and my wife grew up on an Oregon ranch where she knew the meaning of hard work.

Response by PO3 Charles Lewis made Dec 6 at 2023 8:27 PM

PO3 Charles Lewis — Wed, 06 Dec 2023 20:27:37 -0500

Yes, it's possible to do. Like any investment you'd have to qualify for a mortgage. You can use your VA Loan Benefit over and over again. example#1 let's say you find a property 2 or 3 bedroom and buy it. then you could rent rooms to boost your income.

I can help you with this email me and we can loo at your situation and talk more, I know you have questions. [login to see]

Response by Breakinyx Alex made May 14 at 2024 5:25 AM

Breakinyx Alex — Tue, 14 May 2024 05:25:22 -0400

Real estate can definitely be a game-changer when it comes to boosting income. Using a VA loan to invest sounds like a smart move, especially with the potential for https://meine-renditeimmobilie.de/en/increase-in-real-estate-value/ over time. It's impressive hearing about service members with a hefty portfolio under their belt. From what I've gathered, investing in properties, especially in areas like Fort Hood with its development, can be a solid strategy. But it's not without its risks, like any investment. Finding mentors who've been there, done that, could be invaluable. They can offer insights, share their experiences, and maybe even help navigate potential pitfalls.

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Response by CW3 Private RallyPoint Member made May 17 at 2024 9:36 AM

CW3 Private RallyPoint Member — Fri, 17 May 2024 09:36:21 -0400

Well, I can totally relate to your desire to break free from the paycheck-to-paycheck cycle. Real estate investment using a VA loan sounds intriguing, especially considering the success stories of other service members. BTW, I recently stumbled upon a real estate company that seems to have a unique approach to selling differently https://www.thepropertybuyingcompany.co.uk/sell-house-fast/. Exploring their strategies might offer some valuable insights into navigating the real estate market. Anyway, let's keep our eyes peeled for opportunities to grow our income and achieve financial freedom.