Using my VA Loan wisely

[Grovert Fuentes]

Hi All, 

First time posting and new listener on the podcast. 7 months ago, I purchased a multi-family home. I live in one unit and rent the other 3. I'm able to live for free and I'm at 1% rule after renovations. Finally, all units have been renovated and I'm collecting top $$ rent on the units. The profit from the house is paying off a loan I took out for the renovations. Didn't have much $ left after the purchase. So again, I'm breaking even. 

I'm dying to buy again and have my VA loan available. The VA loan offers me 0% down and closing costs could be included in the closing costs. I have a full-time job with decent income and now that all units are being rented out, I should be able to save up to $20k in the next 6 months or so. AND, I'm also in real estate school. In the military, they teach us: If you fail to plan, you plan to fail. So I'm a planner and that's why I'm sticking to my job and pursuing my RE license.

Now that I've given you all my breakdown, this is more of an open-ended question because I'm new to the game. What type of home would you look for? Would you use my projected savings for renovations and buy something that needs updating or reduce the mortgage by paying the closing costs (I know cash is king)? If you were me, what would you do?!? 

I'm all open ears. I'm also in the Northern NJ area. 15 minutes to NYC. But I'm open to buying anywhere within 45 minutes from me depending on the condition. 

[David Pere]

@Grovert, a couple of notes.

1. The VA loan can be used to purchase up to 4-units for you, so you could do another house hack as long as you plan to occupy the residence after closing.

2. You could use the VA renovation loan to buy something that needs updating, and not have to spend the $20k on it.

As far as using the $20k to reduce the mortgage, I think you would be better served holding it as cash reserves (unless you have a large TSP allocation you could use) the $20k mortgage reduction isn't THAT much.