Is VA a good Investment Tool

[Nicholas Zumwalt]

The VA Home Loan option appears to be a double edged sword, but from my limited knowledge and experience, it can be a valuable asset for a beginning Investor such as myself.

The issues that I do see is that, since you don't need even 3.5% for a down payment, you have to negotiate a better deal to factor in the larger loan amount.

The other issue is that I have noticed is that, even though you don't necessarily have closing costs, you still have those costs wrapped up in the loan amount. For example, my current residence I purchased at $267,900 but had to finance just over $273,000 due to those costs, which immediately resulted in a higher mortgage (granted not by much)

Now the obvious Pro's are that you can get into a property with no, or low, money down but that does restrict you in the sense that you may not be able to get that $400,000 duplex, instead having to look at the $320,000 duplex around the corner that needs more work or worse tenants. Which is fine by me but not for everyone. 

The other Pro is that you can use your VA Home Loan more than once, as long as you have the equity in the first property to refinance it into a conventional loan. Now this is awesome because you can essentially "house hack" your way into investing with minimal money.

Not sure if most realize this either, you can even bounce between the VA Home Loan and the FHA Home Loan. This is nice because, if you don't have the 20% equity in your current residence to refinance out of the VA Home Loan, you can move into your next "home hack" with the 3.5% and still be able to "house hack" that following year. This strategy allows a potential investor to get into their first few properties with very minimal money.

The other thing to mention is the condition of property that these loans qualify for. These loans have to conform to Fannie May/ Freddie Mac requirements, but they are also a little more strict. Such as, subflooring can not be exposed and no chipped or peeling paint on the exterior. So while these can be used for light to moderate rehabs, they can't be used for that extreme flip with holes in the floor or missing sections of siding.

While I feel like I have a decent understanding of VA Home Loans, and personally feel that they are a great tool, I would like to know if there is anything I may have missed or don't understand completely.

Thank you for any and all feedback/advice in this regard.