How do I get started?

Question

I am currently active duty military and am trying to get out in the next 4 years, in order to do that I need to be well off financially. How would I start with little to no capital? Military doesn’t pay much. I’ve been doing my due diligence and reading all I can. But I assume I jsut don’t know what I don’t know because I can’t seem to find the answers I’m looking for online. Additionally, I understand the economic foundation can be changed with something like the beer bug. Are there certain areas that will be better than others for real estate investing? My goals initially are to have more cash flow.

Erin Feit · Answer

Hi Miguel,

As someone married to a career military member, I have utilized the VA loan for my primary mortgage. This might be a great option for you to buy a home with very little money down then rent out a room or part of the house to put away some cash to save up for another opportunity. You just have to live in the house for a year (someone correct me if I am wrong) before you can move out and utilize it as an investment property (house hack). The VA loan is definitely worth going for on your first purchase as it does not apply to investment properties! Best of luck.

Ben Bruckman · Answer

@Miguel Fuentes, As others have mentioned there are a lot of variables to take into account when answering your questions, but I'll try based off my experience in the military and purchasing a few homes.

Q: How would I start with little to no capital?

A: If you are in the military you should be able to use a VA loan to finance your primary home, which if/when you change stations sets you up for a perfect rental home if you buy right. This option is an easy way to get your foot in the door with limited to no upfront costs and a good credit score.

Q: Are there certain areas that will be better than others for real estate investing?

A: This all depends on a lot of factors, but the main one of the main one's is the amount of risk you're willing to take on. Especially in our current environment, the recent BP podcast covers a lot of the current concerns with COVID-19. But I think @David Pere, had a good point about house hacking a small multi family (2-4 unit) using a VA loan.

Angel V. · Answer

@Miguel Fuentes i agree with @David Pere, we actually make descent money in the military, so if you dont have the monthly cash flow, I recommend you start with getting on a solid budget, putting it down on paper and seeing where your money is going.

Then find the right multi-family deal or househack to purchase with your VA loan and you'll be on your way.  Good luck!

Theresa Harris · Answer

@Miguel Fuentes  As Jaron said, do your research on the different options.  They all have different risks and time commitments and you need to decide what is right for you.  While you are doing the research, start saving your money and getting your finances in order.  This will put you in a good position.

Jaron Walling · Answer

@Miguel Fuentes Based on you post it's very clear you need a direction. What I mean is you don't have a niche to go after. Do you want to flip, rent, wholesale, or house hack? If you're active in the military you're going to have less time and ability to take calls from tenants. REI doesn't happen over night and you don't get rich quick in this industry. If you do you're leveraged to the hills and walking near the cliffs edge. I'd slow down and figure out the type(s) of property that interest you and solo focus on them.

I'd continue researching your market and start looking for off market deals. Once you find a DEAL a lot changes. You'll have enough knowledge to hit the ground running. That's what I did. The COVID-19 pandemic has disrupted the industry. If you have an emergency fund, good credit, and low debt it's a great time to start investing.

Scott Price · Answer

Hi Miguel,You have received some good advice here regarding house hacking a 2-4 unit using your VA loan benefit, which requires very little money down.  In addition, your future home in Oak Harbor has a very strong rental market with insufficient supply relative to demand.  So, it is currently a good place for you to get started.I own 30 rental units in Oak Harbor, in addition to my properties in other markets.  I also run the local Whidbey Island Real Estate Investors group meetings, which you can find on Meetup.com.  We are a very supportive group and welcome new local investors to help them get started.  Come visit us and introduce yourself at one of our meetings after you arrive on Whidbey.  You will get a lot of in-person advice and help from local investors there.

Scott

Jaron Walling · Answer

@Erin Feit You are correct and that's great advice.

Kiera Underwood · Answer

@Miguel Fuentes I'm not familiar with the WA scene but the best bet I'd advise is get a multifamily property with your VA. Rent out the extra units and the extra bedrooms in your unit. With this you may not cash flow, but you may be reducing your living expenses by having your mortgage more covered than you would!

As people have mentioned above you can hopefully snag a good deal while people are scared to buy/properties value drop due to the virus!

Zachary Schnautz · Answer

Hey Miguel, how are you liking Guam? I imagine the virus might have a hard time getting all the way out there.

I'm in a similar position to you in terms of starting my investing portfolio and what I've decided would be a good move is to live and flip my first property (which allows me to use a low down loan if owner-occupying) and most likely sell and roll those profits into a down payment on a small multi family to house hack. I'm not sure BRRRRing it would work too well since the value add would need to be very significant to reach a 80/20 LTV and still pull out enough for a significant down payment on another property, but then again I'll have to pay closing costs twice and (if I sell in less than 2 years of occupancy) pay taxes on the gains.

You have the benefit of the VA loan for the property you choose to go with, which will allow you to bring very little money to the table; however, if your primary goal is cash flow, obviously the less money down the less you will cash flow. Since Washington is already a hot market and more difficult to cash flow than other states, this means the deal you may have to get creative in finding a property that will cash flow considering these 2 factors. I would suggest building up your reserves as much as possible in the meantime to help afford more of a down payment and researching how you can find great deals in the area. With the beer bug going around the near future of our states housing market is a little uncertain but it's possible we'll see some more deals in the next 6-12 months and hopefully interest rates will remain low as well.

When you make your way over here, let me know if I can be of any additional help! I'm a newly licensed agent but my primary goal is to work with investors and like minded individuals, so if I can help you out in any way feel free to give me a shout. I work in the remodeling industry as well, so if you need any advice in that world or any kind of contractor I've got connections.

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