Using remaining VA home loan eligibility after first purchase

[August Kahle]

Hi everybody,

I'll try to keep this fairly concise but still detailed enough:

A little background- I'm primarily a dividend stock and reit investor who's not overly interested in being a landlord, but I obviously see that it can be affective. The main thing drawing to this asset class is that I feel I have access to an unfair advantage via no money down VA loans that also don't have PMI. Given these circumstances, I'm thinking SFH LTRs due to lower time and effort input required from me (ideally).

My rough strategy is buy SFH (older but (semi) recently remodeled B- to A- properties in good areas likely to continue appreciating and attracting good, trouble-free tenants) 0% down VA (may consider a small amount on second property, like up to 3% just to speed things along) and stay in it as my own primary residence until at least 10% of purchase price paid off and able to cashflow 300+/ month after mortgage, taxes, insurance and 15% set aside for repairs, vacancy, and maintenance (like I said, I'm not overly interested in rental RE, so I want to be sure it's lower effort and worth my time in return). I'd eventually like to move to several acres or more in the country (possibly with a tillable field that could also be rented to be farmed) and have these rents subsidize the increased cost of the mortgage so that my net mortgage (farm mortgage minus cash flows from these rentals) would be the same (or less) as a fairly standard SFH in the city, for a much larger property that would allow outdoor recreation.

I currently own a SFH (2 bed/2bath) that I bought before considering this strategy and any thought about renting it out. However I'm approaching 10% paid off in about a year and would currently estimate about $250-325/ month cash flow after all expenses/set aside. I have plenty of entitlement left on my VA loan for a second house, but don't wish to relocate and haven't grown my family since I bought the first house (I'm single, no dependents). I've heard that the need for a larger house could be a reason to get a second VA loan- does anyone have experience/knowledge about how strong of a "need" has to be shown to qualify? Can I just move up to a 3 bedroom for the next house and say I want 1 room for my "real" bedroom, 1 for a home office (I do work from home several days a week), and one for a home gym, or something? Or does anyone have any suggestions/experience for getting approved for a second VA loan without relocating and/or having kids/marriage? I don't want to refi out of the VA loan on my current house because I have a 2.875% loan and would presumably have to start paying PMI then also.

Any feedback about the VA loan issues or my strategy in general would be greatly appreciated- I've been educating myself for a while now, but am also a total newbie in actually taking any (real estate) investing actions.

Thanks,

August

Oh, in case it helps to know, I'm located in the Midwest, so I could easily find a suitable 3 bedroom in a suitable area for under $250K and it probably would not cashflow at purchase in a B- or nicer area (maybe roughly break even), but shouldn't require much of a special deal to be able to within a few years. Obviously a good deal and better starting position would be preferable, but in my area and timeline I feel it could work even for a pretty average purchase.