VA loan strategy for a veteran in this hot market.

[Sang Yi]

I'm currently in the process of selling out home that we bought with a va loan. Zero down, no funding fees and pmi. 

looking to buy primary residence in las Vegas area. The market is tough when competing against cash and conv buyers paying over list. 

working with an agent seeking off market but drastically fewer options.

I'm actually looking for condos or townhome to lessen overpaying too much. Multi family seems to expensive and not too many available. 

use my va for something cheap for now to live and wait for better opportunity in the near future. Don't know what 60k-70k on hand will be best used for. 

seeking some smart advices.

[Anna Laud]

@Sang Yi

Hi Sang! 

It seems like it might be harder to compete with cash buyers and conventional buyers as it pertains to using a VA loan in certain markets, yes. However, maybe there is an affordable ‘creative' alternative? (I'll explain)

The VA has come a little bit further along with streamlining the appraisal guidelines to more like those of conventional loans, and on average started paying appraisers a little more (has helped some of the hurry up and wait game that has been so long standing in reputation with using a VA loan)- all good things!

Having said that, maybe it would be worth looking into to consider a mixed use property - I only say that as you’re kind of knocking out some of the end use competition there, and you would still be able to obtain a primary residence.

I think that as long as you're no more than 25% commercial in total space usage, there are no more than 4 units total, and you've got a ‘remaining economic life' of at least 30 years (on the residential portion)- you still would be able to benefit from your VA loan product benefits

• 0 down
• No PMI

Now you could work with some potential monthly rental yield from a renter in your ‘commercial space'- and you might be able to refinance IRRRL (Interest Rate Reduction Refinancing Loan/ VA Streamline), saving more there in time maybe if you're sure of the following;

Provable benefit-

1. Better interest rate

2. Lower payments

3. Improved terms

(You just aren't able to switch from ARM to fixed rate to the best of my understanding)

If you went with a VA- cash out refinancing - you could qualify for 90-100% of the value of the property (still closing costs etc obviously)

So if you were able to find a suitable mixed use property, it seems like there might be fewer offers to compete with as far as other offers you’re competing with currently, and you might be able to not only move forward at this time in a ‘hot market’ but, possible have some monthly rental income coming in as well.

So maybe with a little ‘out of the box' thinking, you could find a mixed use property, use your VA loan (0 down/no PMI still), have some money coming in each month, then move to cash out refinance maybe and use that cash out plus the $60-70K mentioned as cash funds for another investment property in time if you wanted to.

After all of this was said and done you would maybe be able to check the following off of your list;

1. Be in your desired area, having a primary residence
2. Using your VA loan product as desired
3. Have some monthly rental income coming in now (at least helping to cover mortgage payment maybe)
4. Move onto IRRRL to better costs or do VA cash out refinancing to obtain further investments and get most use of cash you mentioned ($60-$70K) for addition investment

I realize this is totally different than a condo/townhouse- just trying to help think of an alternative solution to if not compete with other end use offers, to ‘out think’ them maybe in a different option.

Hope that helps some!