Military Investors: Think twice about USAA investment financing

[Jehon Bendokas]

BLUF: it's okay to use USAA if you are going to house hack as a method of scaling your real estate investment business...I would recommend finding a lender that understands your need beyond the normal consumer level services. 

USAA is my recommended bank, insurance company, and brokerage for any young service member that I encounter. I am an active duty, prior enlisted, Air Force officer who has been in uniform for 14 years and a member of the USAA community for 14 years. I have become intimately familiar and a strong advocate of their company and their dedication to the service member. 

Although I do recommend many of their services, if you are a RE investor, I do not recommend their RE financing unless you plan on house hacking with VA loans from duty station to duty station.

-They have a limit on the number of mortgages (four) one can have in their name. This applies to the purchase of anything other than primary residences. This includes mortgages that are serviced by other lenders. If you have four other mortgages and you plan on buying a new primary residence, you should be fine.

-Their mortgage specialists don't understand real estate investment. You are better off seeking financing from a bank that can speak the jargon and understands investment terms.

-They allow as little at 15% down (which is a positive)...with inexpensive PMI, however, at purchase, if your home appraises such that your equity drive below 80% LTV, they will not remove PMI unless you agree to pay for another appraisal after closing.

My real estate business going forward: I will use USAA for the purchase of my primary residences through VA loan as I PCS. Having their homeowners or rental property insurance in the same location as my loan statement and my property bank account is a level of convenience that has spoiled me. I will use other community banks to handle the purchase of my organic investment properties with all money funneling through my USAA bank accounts to the respective community banks.