Starting Out Looking to Convert Current Residence(s) to Rentals

[Jodie Newman]

Hey everyone, kind of longwinded so please forgive me! My wife and I were recently talking about moving within the next year as we will be empty nesters. We would like to downsize the house and gain some land if possible. This got me curious about rentals and REI in general and has led me down a very interesting and exciting path of wanting more. I'm a little torn on how to proceed with my current situation so I was hoping to get some recommendations and thoughts from the BP community.

I currently own two houses. One is our primary residence south of Indy which has a 30yr VA mortgage. The other property is our previous residence in Indy, where a family member now lives. I have owned this since 2008. It has a conventional 30yr mortgage that I refinanced in 2020.

What I would like to do is use my VA benefits to purchase the new property which would be our new primary residence and bring our family member with us. (An in-law suite would be great for this, but we will see what we can find / build.)

Since my VA loan is currently wrapped up in my current residence, I was thinking I would have to refinance into a conventional. The rate might be slightly higher, but I would get my VA benefits back to use on the next property, and possibly a little cash back. I believe I'm sitting around 65% - 70% LTV right now.

I'd also like to take out a HELOC on the Indy house to make some repairs such as HVAC, flooring, etc… I'm probably around 45% - 55% LTV on this mortgage right now. I like the idea of the HELOC so once I pay it down from the repairs, I would still have it there to draw against again for future down payments, etc…

If I could pull this off, I would have our new property, wherever that would be, under my VA loan and two rental properties. From the numbers I keep running based on the current markets where these houses are I believe I would have around $200 - $400 in monthly cashflow for each property.

Please hit me with your thoughts and recommendations. Has anyone done anything like this? I know it's not that much of a unique situation, but as I'm just getting started in REI, I figure I can get a decent head start if I can make this happen with the two properties. Any ideas on where to get a HELOC on investment properties? Should I just sell my current primary residence to get out of the VA loan instead of refinancing to a slightly higher rate and renting? Then use the cash from that sale towards either the new primary residence or another rental?

I look forward to hearing your comments, learning, and connecting with the BP community! 

I’m excited to see where this goes. Thanks in advance!