Getting Started With Questions About Financing

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Getting Started With Questions About Financing

Jesse Boren
Member since 2019 · 6 posts · 3 votes

Good day BP!  I am in the military and I'm interested in investing in real estate for the duration of my active duty/AGR service at which point I can take my military retirement and cash flow from single family/multi-family units and truly retire at a relatively young age.  The strategy there would be to buy and hold properties, preferably all in the state of Texas (San Antonio, Abilene, San Angelo, Amarillo, Lubbock, Metroplex), and rent out for the foreseeable future.  The state is still left up to chance but it seems likely.  

I am just getting started with my REI education with the expectation to purchase my first property in approximately six months. I don't have much capital at this point or at least not enough to where I'm willing to part with most if not all of it for a down payment using a traditional loan. I also don't anticipate that I will have enough by the end of the six months so I am hoping to use a VA Loan on a multi-family unit coming out of the gate.

I have read a couple of e-books now and a variety of blogs about this subject.  Seems that the majority of the information is promising aside from the occasional bad experience typically stemming from the original purchase price.  With that, does anybody else have any good information about how to go about using this strategy to maximum effect?  I am reading information about "retail price" using a VA Loan?  Does this mean that you can't negotiate a deal using a VA Loan...for instance, can I not use the 70% rule?  Can you use the BRRR Strategy with a VA Loan? I'm sure I will have more questions moving forward but I think this is the glaring one for me at the moment. 

I apologize for my ignorance up front.  I am very appreciative of your time and information, all.  

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Will Pritchett
Rental Property Investor · San Antonio, TX · Member since 2011 · 513 posts · 290 votes
7y

@Jesse Boren You came to the right place.  My friend @David Pere blogs here on BP and is all about military investors.  Check him out.  I agree with what @Stuart Grazier said as well.  Learn all you can and save up some cash reserves and then try not to have to use it!  That's my favorite strategy.  

Best of luck

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  • Stuart Grazier
    Investor · Parker, CO · Member since 2016 · 550 posts · 389 votes
    7y

    @Jesse Boren Using your VA loan benefit as a military service member is a fantastic way to get started. If your family dynamic can stomach it, I'd recommend house-hacking (ie rent out rooms and/or units of a duplex, triplex, or fourplex). This will require very little of your own capital.

    The BRRRR strategy and the VA loan don't go hand-in-hand, as they are a very different strategy. The BRRRR requires that you pay in cash on first purchase (either your own cash, or someone else's cash), and buy at a deep discount because the property is in bad condition; the VA loan normally will require that the property is in good condition. However, there is now a new VA rehab loan, but I don't know the ins and outs of those, as they are fairly new. You typically won't get a super-discounted property when using the VA loan because the property typically has to be livable on initial purchase (you have to intend on living in the property for a year). However, that doesn't mean you still can't find a good deal below retail value. I'd suggest looking for houses that are the ugliest on the block in good areas (ie they are outdated cosmetically, but still have good bones and the major systems are still in good shape).

    Hope that helps. Good luck on your REI journey and please let me know if I can help out in any way.

    1Reply
  • Will Pritchett
    Rental Property Investor · San Antonio, TX · Member since 2011 · 513 posts · 290 votes
    7y

    @Jesse Boren You came to the right place.  My friend @David Pere blogs here on BP and is all about military investors.  Check him out.  I agree with what @Stuart Grazier said as well.  Learn all you can and save up some cash reserves and then try not to have to use it!  That's my favorite strategy.  

    Best of luck

    2Reply
  • Autumn RankinPro Member
    Rental Property Investor · Bandera, TX · Member since 2017 · 148 posts · 56 votes
    7y

    @Will Pritchett YES!! @David Pere is an excellent resource. 

    He also has a facebook page you can join called Military to Millionaire

    and a website!

    1Reply
  • David Pere
    Rental Property Investor · Springfield, MO · Member since 2016 · 1k+ posts · 890 votes
    7y

    @Jesse Boren I am producing 4 videos on the VA loan and strategies as we speak. The first of which will go live on the 27th. In short, you can absolutely negotiate purchase price, and buy 70% LTV with the VA loan...but you can't buy a beater.

    That is, until recently!

    There is a VA renovation option now that will allow you to buy even teardown homes and renovate them for 0% down!

    2Reply
  • Jesse Boren
    OP
    Member since 2019 · 6 posts · 3 votes
    7y

    Thanks you all for your responses!  @Will Pritchett, Thank you for the input.  I have been all over @David Pere's website already. So much good information! I look forward to watching the videos and learning more about this VA renovation option. I've only read a small bit about it thus far. Am I that far off in thinking that it works something like the 203K FHA loan with the exception of requiring no money down?

    @Stuart Grazier, thank you so much for your information, Sir! I was looking through some stipulations for the VA loan and started to come to that conclusion but I couldn't find anything definitive so thanks again. So my question then is this, what is the game when using the VA loan for your your initial investment? If I'm not completely incorrect, the purpose of being able to use the 70% rule and/or the BRRR strategy is to generate cash flow out of the gate. Considering the requirements associated with the VA Loan, being able to hit those numbers is unlikely and sort of takes generating immediate cash flow out of the equation for me.

    Assuming then that I will more than likely have to pay retail, is the play to buy a multi-family unit, have the other residents pay towards my mortgage and other expenses while trying to get as much equity in the house as possible?  Then after a year, I can move out, have some additional residents move in, and start generating cash flow?  At which point I would just start the process all over again somewhere else?

    Thanks again!

    1Reply
  • Jesse Boren
    OP
    Member since 2019 · 6 posts · 3 votes
    7y

    Also, thank you @Autumn Rankin for the heads up.  I went ahead and Liked the FB page.

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