To buy at retail price with VA loan or not.....?

[Donald Hendricks]

Mulling over my options, I have my VA benefit sitting there unused. If I use this, I would have to use it on something at retail price, as most all of the wholesale deals need work and would not qualify. Also, I could not close quick enough with a VA loan.

I am considering using it to buy a 4-plex in which I could cash flow about $800 a month after PITI, vacancy and maintenance factored in. It would cost me zero down payment, but there are several other fees associated with this type of loan, most of which, including closing cost can be rolled into the loan itself or be paid for by the seller. I can pretty much get into the property with very little out of pocket. This would a long term hold.

My only issues with this are that I have to live at the property, as they are for owner occupants, not investing. The rules say that I "must intend to occupy", but are not more specific than that. I currently live in a house that I own. Also, it pains me to pay retail for property when there are wholesale deals to be had which would give me instant equity.

I have cash on hand to buy wholesale properties, leveraging my money with hard money and then refi, rent and hold. The VA loan is just another option available to me.

I keep going back and forth in my mind about this, any input to help me make a decision?

[Mike Sattem]

Hey Donald,

I would encourage you (if your family is on board) to seriously look at using your VA loan on the 4-plex. As a $0 down option, this could pay huge dividends for your investing future. In addition to the $0 down, VA rates are ridiculously low ( I'm at 3.25% on a 30 year from 10 months ago) as compared to 5% or more on a non-owner occupied multiple family with 20% down, additionally the VA loan is pretty easily transferred to a new buyer down the road if you decide to sell. As stated above, you must, MUST, live in this property for a reasonable period of time. If the VA / your lender find out you didn't occupy they will call the loan due. Also, plan on getting a rental agreement in place for your current home, or listing it with a Realtor, as the lender will want to see you transferring your primary residence to another status.