My Story of Buying a Commercial Property with a VA Loan

[Jonathan Dudley]

Before I started by real estate investing education with Bigger Pockets it was the summer of 2013 and I was searching for that perfect house. After months of research I found the perfect house build in 1900 in a historic part of town. Armed with my VA loan I was sold on getting this property. For some reason in my area alot of real estate owners had rezoned their properties into commercial properties. It is also one of the reasons I found this house no one was looking at it because it was listed as a commercial.

I had read all the guidelines, YOU CANNOT BUY COMMERCIAL PROPERTY WITH VA LOAN. So I asked my lender is there a way around this road block and to my surprise there is. If the property your buying was originally built as a residential property and it is obvious that it is residential you can purchase it. I did have to get a letter from the city stating that they defined this house as a residential property it had just been rezoned. 

While I am new to bigger pockets I hope that this information can be used to benefit fellow members. Thanks. 

[Brendan M.]

@Jonathan (tagging doesn't seem to work mobile) thanks for the reply and advice.

For anyone else who finds this post with the same question as me regarding 5+ units, I messaged the VA and got this answer:

"The maximum number of units is 4. The residential appraisal form 1025 for multiple unit properties is for 2 to 4 units. Anything larger than 4 units requires a commercial appraisal and by definition is a commercial property and not eligible for VA guaranty. With regard to zoning, VA requires that residential be an allowable usage no matter the zoning type and the highest and best use of the property must be residential and not commercial. The property must be residential in nature. We see many properties that are in an area that was zoned residential and later became commercial/residential and are still acceptable since residential usage was still typical in the area."

Hope that helps!