Veteran, College Student, looking for avenues to start investing

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Veteran, College Student, looking for avenues to start investing

Nicolaas W.
New to Real Estate · Austin, TX · Member since 2013 · 63 posts · 3 votes

Hello all,

I am a Veteran and college student attending Texas A&M in College Station, Texas. I originally moved to Austin upon leaving the military, and wish I would of purchased a house when I did, but no sense rushing things.

I want to start investing and a college town seems like a great start. I have bounced a couple ideas around; single family renting out rooms, multi family, as well as a live-in-flip.

I have no problems getting dirty, as I spend my free time building things with friends, welding, fabricating etc.

I am looking for guidance as to some key articles I should read, books etc, as well as some avenues to explore regarding the ideas listed above. I am currently listening to and taking notes on the BP podcast, Cardone Zone, and Flipping Junkie.

My situation is that I have the convenience of receiving $1700 a month for living expenses when school is in session thanks to the GI Bill, so paying a $600 mortgage is very achievable. I will also be finishing up this year, with atleast $25k in my pocket from a long internship. I have already spoken with my father about assisting me in getting a loan, since I will not have a "steady source of income" in the banks eyes, and per advice from others, using the VA home loan would be difficult (He would essentially be my investor?).

I do like the idea of a live-in-flip as I could have weekly projects to accomplish (which I enjoy), and I would be needing a place to stay regardless, as well as the fact that I have had a string of difficult roommates, and would not mind having my space be my own.

I have read some threads with mixed reviews on live-in-flips regarding money lost, dust etc, and of course this is a numbers game, but being a tinkerer, I am intrigued by the process. Additionally, being able to experience the repairs hands on, I feel it would allow me to be a true judge of the cost and length of different activities if I do contract them out in the future. 

Thank you in advance for any and all advice/guidance.

-Nico

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Chris Sweeney
Real Estate Investor · Austin, TX · Member since 2011 · 271 posts · 106 votes
9y
Maybe look into house hacking a duplex with the fha renovation product. Search house hacking here on BP to learn more.
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  • Chris Sweeney
    Real Estate Investor · Austin, TX · Member since 2011 · 271 posts · 106 votes
    9y
    Maybe look into house hacking a duplex with the fha renovation product. Search house hacking here on BP to learn more.
    2Reply
  • Nicolaas W.
    OP
    New to Real Estate · Austin, TX · Member since 2013 · 63 posts · 3 votes
    9y
    Originally posted by @Chris Sweeney:

    Maybe look into house hacking a duplex with the fha renovation product. Search house hacking here on BP to learn more.

    I have seen people speaking about it, I will look into that.

    Thank you

    0Reply
  • Account Closed
    Rental Property Investor · Central, FL · Member since 2016 · 950 posts · 821 votes
    9y

    getting a loan unless you have income will be hard to get.  Your bah from the gi bill will not be counted as income.  I'm not sure about the rest of your money.  But I ran into that problem. They won't count it as it is not guaranteed throughout normal services like a W-2 job.  

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  • Nicolaas W.
    OP
    New to Real Estate · Austin, TX · Member since 2013 · 63 posts · 3 votes
    9y
    Originally posted by @Account Closed:

    getting a loan unless you have income will be hard to get.  Your bah from the gi bill will not be counted as income.  I'm not sure about the rest of your money.  But I ran into that problem. They won't count it as it is not guaranteed throughout normal services like a W-2 job.  

     Yes that is my understanding as well, that's why I am hoping my father being in on it will help.

    0Reply
  • Tony Le Claire
    Glendale, AZ · Member since 2017 · 24 posts · 14 votes
    9y
    Hi Nicolaas, Great post and I like your ideas. I work as a Mortgage Loan Officer for a big bank, so hopefully I can help with your situation. First off from a fellow veteran (USMC) thank you for your service, glad to see you're taking advantage of some of the benefits Uncle Sam offers us. Reference your situation, a way you could work out financing as you mentioned is to do a conventional mortgage and have your father listed as a non-occupying co-applicant. Essentially you would occupy the home as your primary residence and your father's role would be to assist you in gaining financing through qualifying his income, assets, etc. The benefit to this is your loan would be for a primary home (Versus investment home, etc) which would allow you more favorable rates and less of a down payment requirement. Given that you are in college, have you considered a combination of a live in flip and a rental? For example, say (perfect world) you find a home after lots of searching on the MLS, you feel is undervalued. Let's say this home needs a little cosmetic work, which is why it's also not being sold for a premium. Let's also assume you get this home under contract with your dad and eventually close escrow. What if you then rounded up a couple of your fellow veteran/college buddies and invited them to live with you and in exchange with their help in renovating the place, you offer a good deal on a room rental? This would allow you to fix the place up and hopefully get some good equity out of it, as well as "house hack" by renting rooms to friends. AND bonus, these friends also are your no-charge handymen who help you build equity in the home. Just pay them in beer once in a while. Hope this helps. If you have any other questions don't hesitate to ask. -Tony
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  • Nicolaas W.
    OP
    New to Real Estate · Austin, TX · Member since 2013 · 63 posts · 3 votes
    9y

    @Tony Le Claire Semper Fi Devil Dog, and thank you for your service as well, I have close friends that were Marines.

    Are FHA loans available to me if I do not have a W-2 but my father is there to qualify with his income? I understand people have used them to get nice interest rates and low down payments, while living in the house.

    I have thought about renting out to fellow students and friends yes, and I am not against it, because it would be nice to have extra income in the place, I would just need to screen very well, per the reasons stated in the original post. 

    I have also seen the suggestions from others about house hacking with a du, tri, or quad-plex. Those sound interesting, I just will need to be humble and remind myself that I am making an investment for the future and if I can find a good deal on a plex of some sorts, its a worthwhile sacrifice for not having a garage (as most do not have garages in my area). Again this is all about numbers right?!

    Thanks for the suggestions

    0Reply
  • Tony Le Claire
    Glendale, AZ · Member since 2017 · 24 posts · 14 votes
    9y
    Hi Nicolaas, Semper Fi right back at you dude, some of my best friends were Army guys. The bank I work for does not offer FHA loans, however my knowledge of it is you could have your dad co-borrow with you on an FHA loan even though he wouldn't occupy the property. As a CYA, contact an FHA specific lender to confirm this but I'm almost certain that is a possibility. Reference duplex, triplex, and fourplex properties I would say if you find one where the numbers actually make sense then go for it. You would not have a garage, but you also wouldn't have to technically live with your tenants, which is always a plus. If your market is anything like it is here in Phoenix, it's really tough to find a multi unit property that's not in the ghetto but also not crazy expensive. If it's better where you're at I would go for it, as many members on BP have mentioned multi unit investing is much easier to scale. What's your budget for purchase price, rehab, money expense, etc?
    0Reply
  • Nicolaas W.
    OP
    New to Real Estate · Austin, TX · Member since 2013 · 63 posts · 3 votes
    9y

    @Tony Le Claire Well as I said, I should have around 26K from this internship that can go to either a down payment or rehabbing the place. If we are talking strictly down payment, on a 3.5% down loan, 10 grand could get a really nice place in college station. And the only way that would make sense is for a multi unit place that was a bargin (I am speaking based off light research, as I am focusing more on learning vs. digging into deals right now, especially since i am currently out of state).
    I have not talked super specifics with my father, but he was saying was that he would be contributing as well, not just co-signing the loan. I am treating him as an investor so as I learn more (and I still have many books to read), I will be able to understand the figures more. I fully intend to live in the house, and yes most multi unit places especially over 2 units, are usually in not nice areas, if they are anything I could afford as a first time place. I am thinking a duplex is probably what would happen if I ended up getting a "plex" of some kind. From what I am reading, that is more ideal from a growth standpoint than a single family. 

    0Reply
  • Nicolaas W.
    OP
    New to Real Estate · Austin, TX · Member since 2013 · 63 posts · 3 votes
    9y

    Thanks for the info @Account Closed, I am not in the military anymore, so deploying is not an issue. I do plan to live on the property regardless of it being a SFR, or an "plex". But honestly, I need to see how long you have to be on the property with the FHA, I thought I heard something about 2 years, so having a duplex sounds more and more appealing.

    0Reply
  • Chris Quinn
    Realtor · College Station, TX · Member since 2016 · 128 posts · 68 votes
    9y

    Look in to FHA 203K loan. This will allow you to purchase property and also includes a rehab budget. Currently working with a BP client doing the same thing.

    1Reply
  • Stephanie P.Pro Member
    Washington, DC Mortgage Lender/Broker · Member since 2016 · 4k+ posts · 2k+ votes
    9y

    @Nicolaas W.

    First Nicolaas, thank you for your service. Without brave men and women "standing on that wall" life as we know it would be very different.

    The answer regarding income is you need income in order to qualify for either a VA or FHA loan. There is no getting around it. If you found a 4 unit where you could rent out 3 of the units, you could use that money toward income, but if you don't have a W2 job or a have been self employed for 2 years, you won't qualify for a regular loan.

    There are numerous no income verification loans out there that you could get with half way decent credit, but they are not for owner occupied properties.  

    Now that I've rained on the parade, here's the solution.  Live where you are and start accumulating rental properties. Here's how.

    Set up an LLC. Use your initial seed money to buy a rental property that needs work using hard money. You've already got the initial down payment and some to get started on the rehab (usually 80% of the purchase price and 100% of the rehab is covered). Then refinance out of the hard money once the rehab is complete into a no income verification product that has a decent rate (rates are running around the mid 6's on a 30 year fixed if your credit is decent). Once the rehab is complete sell it and increase your seed money until you've done it enough times and for a long enough period to be considered self employed by the IRS so you can qualify for a 4 unit using FHA.

    That's your answer.

    Hope that helps

    Stephanie

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