One-time close construction loan with VA

[Edet Umoren]

I am currently on active duty and looking to start my Real Estate journey as I retire in the next four years. I know about the VA's One Time Close Construction loan for us veterans. I want to use it for a fourplex somewhere in Riverside, CA., which is the closest I can to Camp Pendleton, where I am stationed. Any advice is taken seriously as I like to start building my portfolio.

[Scott Schnabel]

VA Construction loans are tough. Typically the buyer makes and interest only payment on the loan during construction. VA doesn't allow this so the moneys to be paid are added to the project. Sometimes this creates appraisal problems.

[Shawn W.]

Quote from @Scott Schnabel:

VA Construction loans are tough. Typically the buyer makes and interest only payment on the loan during construction. VA doesn't allow this so the moneys to be paid are added to the project. Sometimes this creates appraisal problems.

I'm also looking in to VA construction loan as well, potentially for a BRRRR property. Could you please expand on why it creates appraisal problems? Thank you! @Scott Schnabel

@Edet Umoren Curious if you ended up getting the VA One time close construction loan?

[Scott Schnabel]

Quote from @Shawn W.:

Quote from @Scott Schnabel:

VA Construction loans are tough. Typically the buyer makes and interest only payment on the loan during construction. VA doesn't allow this so the moneys to be paid are added to the project. Sometimes this creates appraisal problems.

I'm also looking in to VA construction loan as well, potentially for a BRRRR property. Could you please expand on why it creates appraisal problems? Thank you! @Scott Schnabel

@Edet Umoren Curious if you ended up getting the VA One time close construction loan?

Adding money to the loan for fees does nothing to increase the value of the home

[John Burke]

Quote from @Shawn W.:

Quote from @Scott Schnabel:

VA Construction loans are tough. Typically the buyer makes and interest only payment on the loan during construction. VA doesn't allow this so the moneys to be paid are added to the project. Sometimes this creates appraisal problems.

I'm also looking in to VA construction loan as well, potentially for a BRRRR property. Could you please expand on why it creates appraisal problems? Thank you! @Scott Schnabel

@Edet Umoren Curious if you ended up getting the VA One time close construction loan?

The interest is added to the builder's cost sheet and factored in to the total cost to build. 
What you want to avoid is expensive upgrades that don't add value to the home, like 18K for fencing.
The good news is the appraisal will be done based on the building plans and the value will be subject to the completion of the home. If you get the appraisal back and there's an issue with the value, you can sit down with builder and see where you can cut back on your costs.
Side note. The nice thing about a VA construction loan is you're not making a payment every month on the construction loan.
Side note. VA requires you to occupy the home as your primary residence.

[Adrian Pinson]

Quote from @Shawn W.:

Quote from @Scott Schnabel:

VA Construction loans are tough. Typically the buyer makes and interest only payment on the loan during construction. VA doesn't allow this so the moneys to be paid are added to the project. Sometimes this creates appraisal problems.

I'm also looking in to VA construction loan as well, potentially for a BRRRR property. Could you please expand on why it creates appraisal problems? Thank you! @Scott Schnabel

@Edet Umoren Curious if you ended up getting the VA One time close construction loan?

To avoid appraisal issues with VA construction loans, work with a VA-approved builder, keep plans detailed, and stay in touch with your lender and appraiser. Make sure everyone's on the same page if any changes or delays happen. Do you have a lender you're working with?