Using VA Loan and Conventional Loan Around the Same Time

[Chris Parker]

Hello Everyone!

We are looking to buy our first property within the next 4-6 months. Our plan is to use the VA loan ($80-100k) for our primary residence (looking for a SFH or duplex) and to also use a 30 year conventional loan to buy another property or two to rent. The VA loan gives us the option of putting 0% down on the primary residence and we have $35k to use for the other properties. We would like to buy these properties around the same time frame, but can wait longer on the rental if needed. At the price we're interested in for the rentals, $50-60k, the $35k could go a long way as a down payment.

I know that we would typically have to wait two years (one if the lender agrees) to use the rental income as an income source. It seems to me that using the VA loan first is the right path to take and trying to get the other loan after the VA loan is used. We're paying way too much rent right now and could essentially save at least $500 a month by buying a house in which to live.

We want to leverage all of our resources the best way possible for maximum returns and growth.

Finally, the questions: What would you do if you had the VA loan as a resource as well as $35k to invest in other properties? Is a primary home (VA) AND two rentals a possibility?

Still very new to this so please feel free to poke as many holes in my plans as possible. All opinions and theories are welcome.

Thanks!

[Robert Leonard]

@Chris Parker I think your plan is reasonable. My main recommendation is to buy your primary residence like an investor buys properties - look for undervalued properties. When you use your VA loan, stay below what you CAN borrow and only borrow what you NEED.

As an owner occupant (OO), you have a huge advantage with today's OO preferences for REOs from some sellers. Search homepath.com, hometelosfirst.com, hudhomestore.com,

http://reo.wellsfargo.com/WBREOHome.aspx and other sites that offer OO only buying periods when properties first hit the market. You can buy a property at below market value, but finance 100% of it with your VA loan. While lots of the REOs need repairs that won't make this feasible, I've seen plenty that are financeable. That would be pretty slick to pull off!

Your family is small, so you definitely don't need a McMansion.  If you can buy a mid-sized (1200-1600 sq ft) 3BR in a decent area that anyone would be willing to live in, the house will make a good rental when you move out. 

The lower you can go with what you borrow for your primary residence, the easier it will be to qualify for your next properties! Best of luck!