VA LOAN a GOOD THING??

[Derek Okahashi]

Aloha Everyone,

I am a Realtor, somewhat of a FI/RE guy, and conservative when it comes to debt. Not quite Dave Ramsey, but I get what he is trying to do and am not mad at his approach. With that said, I think the concept that a VA loan is the greatest thing since sliced bread is over stated. I had coffee with a loan officer today. Great guy and seems like a very solid person to have on your team that can break down a lot of numbers. He specializes in VA loans.

Simply put, if you finance something for 100% on Oahu, you will not be able to cashflow or even break even if you have to leave. Military people get restationed and move often (I am prior active and currently a reservist). If you finance a $700k place here on a VA loan with little to nothing down, your payment is going to be about $4k/mo. Your place is probably going to rent for $3200/mo. That's $-800/mo cashflow when you leave not counting cap-ex and vacancies etc. So when you get restationed, what is your exit strategy? Are you relying on appreciation and reselling? Better be a lot to justify the costs and commissions paid out on the resale. Good chance you'll be ok after 4 years of debt pay down in Hawaii but there are 4 year periods where people have lost their shirts. Maybe the plan is to refi but what if interest rates have gone up? It may not put you in a positive cashflow situation.

This conversation does not serve me to close more deals and to ,rinse and repeat to increase my commissions but I feel like it is the elephant in the room as we are pushing people through this 0% down (20% more debt) loan product. Someone change my mind and show me the light please....