Assuming VA Loans

[William V.]

Hey BiggerPockets,

I've got a question which -- after hours of research -- has left me just as confused as where I started. I was hoping someone here might have some guidance as to where I could further delve into the topic of assuming VA loans.

As a quick background, I'm a 22-year old helicopter pilot with the U.S. Army and am currently stationed in Alabama. I've always been allured by real estate investment because of the strategy and challenge in it; it's by far one of the best wealth-building investments if it's done right. I just recently bought my first investment property, and needless to say -- I think I caught the real estate bug.

I realize one of my biggest benefits as a veteran is the VA loan -- 0% down, low funding fee, no PMI, and the entitlement is good up to $417,000. I've been doing a lot of research into VA loans, and something I stumbled upon was the fact that VA loans are assumable. Once I discovered this, I've been doing a lot more research into the topic. I definitely see potential for a niche investment strategy given what I do and in the proximity to where I do it -- I just have no direction in how to go about this type of investing.

Many of the homes surrounding the places I could be stationed at are bought with VA or FHA loans -- both assumable -- and could be a great way to acquire a handful of properties with little to no cash out of pocket.

How could someone like myself source a seller with a VA loan?
I realize I could advertise, but I'm such a novice, I'm wondering if there's an easier way to go about it. Ideally I'd like to find the seller versus the seller finding me at this point.

How does one structure a deal involving a loan assumption?
I'm sure it could vary from just taking the mortgage off their hands (highly unlikely, I'd imagine) to offering a cash "downpayment"/incentive, but again -- I have no idea as to how the process works. I discovered that until the property cashes out, assuming a VA loan keeps the veteran from utilizing their full benefit again. I realize this is probably the biggest setback in acquiring their property, but I'm sure there's some people willing to walk away despite this.

How does a real estate agent fit into the equation, if at all?
Would working with a real estate agent be beneficial in sourcing and/or brokering a deal? Considering the deal isn't your typical "sale," does the agent still stand to acquire a commission? If not, I guess I could count them out.

If anyone has knowledge -- or can point me to a source that explains this thoroughly, I'd really appreciate. I'm pretty tech savvy, and I've yet to stumble upon the answers thus far.

-W

[Scott Celley]

Finding properties with assumable VA or FHA is not difficult anymore. There are a number of websites that have assumable listings, most notably Zumption, but the problem is with your intention of being an investor. Both FHA and VA program require you to be an owner/occupant, although I am not aware of any cases where either of these loans were called in when someone purchases the property with the intent to live in it but then subsequently decides to rent it out. A slight hiccup with VA loans is that if the assumptor is not a veteran or serviceman then the seller cannot take our a new VA loan until the old one is paid off. If the assumptor is another vet than the seller can get a new VA loan.