Invest or dream home?

Question

Hello,

I am currently in the military, active duty. I have been in for seven years and I don’t see myself retiring from it. I have a pretty good résumé and I like to think that I have a good chance when I’m out. With that being said I am on recruiting duty and I am close to my hometown where I want to live. My mother-in-law has 69 acres and it was the house my wife grew up in. We want to raise our children there (3 yo and 2 mo) and that is the whole goal of getting that property and house.￼ The house and property is probably worth $800,000 and we can probably get a pretty good deal on it because she wants to keep it in the family as well though has not given a specific price. I have 2 1/2 years left in the military and my question is should I try to buy duplex right now or get that property utilizing the VA loan. ￼￼ My goals multi family but I don’t want to use the VA loan and get wrapped up in something and not be able to use it down the road. I think I have my answer but I just want to hear different perspectives.

Thank you

Justin Phillips · Answer

Being that you're buying from a family member, who I assume owns it outright, have you considered owner financing? That might be a great way to get into the property and retain ample flexibility. That's the first avenue I'd explore. Sounds like a fun property, a young kid's dream!

Ben Lin · Answer

I would keep talking to your mother in law about owner financing option. Have you explained to her the taxes she has to pay if she takes a lump sum? Maybe find out how much cash would make her feel comfortable and see if you can come up with that amount.

If your mother in law is not in hurry selling her house, maybe you should buy a duplex first. Make it cash flow and you may be able to take some cash out of it in the future when you refinance. And if your mother in law still doesnt want to do owner financing and your family really wants that house you can just sell the duplex and by then hopefully it has appreciated.

See if you can sit down with your mother in law and ask her to sell you the house in 2 -3 years time? This way you can invest and save some money first for the next few years.

Good luck to you sir.

Axel Meierhoefer · Answer

@Wyatt Anderson I am retired military - small world.

It sounds like the property is close to where you are right now. I would definitely use the VA loan to purchase it. If you can reasonably expect to get at least one more assignment before you get out, you can move without any penalty and use VA again to buy a property at your next assignment station. That could then be your first investment property after you leave the military.

In case you decide to stay in the military, the best approach is to keep buying a well-performing property at each assignment location because there is no cheaper way to get investment funds.

It might sound a little counter-intuitive, but I'll be happy to explain. Feel to DM and we can set up a call

Nate Sanow · Answer

I’ve had to rent when owning investments due to career moves and it sucked. If I understand correctly and it’s possible and feasible to get this property with built in equity than in my opinion it makes sense to shore up living in what you own, and invest later, if at all possible. Contrary to Kiyoaski or Cardone advice I think your primary residence can be an asset. Especially if considering pulling out equity from it someday to deploy into rentals, or moving out to rent it out, or a myriad of other things like that. The VA loan is an awesome product and how many other ways can you buy something for as close to zero down ? (closing costs being an exception)  Unless there is a smoking hot investment deal that’s going to launch you into financial independence on the table it’s my opinion to handle getting this property ESPECIALLY with all that land. Good luck and best wishes

Doug Spence · Answer

@Wyatt Anderson Welcome to the BP forums! I'm also active duty and invest in real estate on the side. I have a few questions:

What is your mother-in-law's timeline as far as wanting to sell the property? Does she want to sell it ASAP or is she ok waiting a few years?

Is the property close to where you work or would you be buying and not moving in until you're out of the military?

How much does she want for the property? Will that number change if you wait 2.5 years to buy? I realize it may be awkward talking about money with her, but you need to know how much she wants for it whether you decide to buy it now or not. The mortgage payment on an 800k loan is going to be a lot! Probably 4k or more each month.

Jeffrey Albaum · Answer

Hi @Wyatt Anderson - first off, thank you for your service!

Regarding the dream home - it sounds amazing! While I don't know the inner workings of how VA loans work - is it possible to use the VA loan to purchase the home from your mother in law, and in 1.5-2 years refinance out to use your VA loan on another property?

Theresa Harris · Answer

If you want to buy the home, then I would do it.  It sounds like that is your dream and your family is the most important (as it should be).  If you buy it, I am assuming you and your family will move in and your mother in law will buy a new home.  To do that, she will need the money up front.

Wyatt Anderson · Answer

@Justin Phillips

I’ve tried to explain to her owner finance and like anyone else she is skeptical. On top of that she wants a lump sum for whatever reason.

Wyatt Anderson · Answer

@Axel Meierhoefer

Thank you, I don’t plan on staying after this enlistment. I had bought a house back in the day and ended up selling before any of this became an idea. This will be my last duty station

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