New to REI, lots of questions!

General Landlording & Rental Properties
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New to REI, lots of questions!

Cameron Miles
Duplex Investor · Humble, TX · Member since 2014 · 16 posts · 1 vote

Hello everyone!

My name is Cameron Miles and I am currently active duty military (USMC) with a little over 7 years of service, however I will be separating from active duty in 10 months. My plan is to move to Houston Texas (I am originally from Austin) so I can attend college at the University of Houston and purchase a multifamily home, either a duplex or fourplex. While attending college I will receive $1,623 per month for 36 months as long as I am a full time student. Using my VA loan to purchase a property with 0% down and renting the other units while receiving BAH makes me feel like I have a leg up for my very first purchase. Here are my questions:

1. To qualify for a home loan, my understanding is that I must be employed and show my income. Part of my dilemma is that I move to Houston in either December or January, but don't officially separate until March 31 2015. I can seek employment, but I cannot be hired until I receive my DD214 upon separation. I wanted to purchase a property prior to my departure from here (Okinawa, Japan) so I have an address for the military to ship all of my household goods to. Is there a way I can purchase a property prior to separation if I cannot legally take on another job? I have a wife and daughter so staying with a friend would be inconvenient for everyone involved.

2. The degree I am seeking at Bauer is their entrepreneurship degree, which mainly offers daytime, face to face classes. This means I can probably only get a part time, night and weekend job while I am a student. Is it feasible to be approved for a home loan with only part time work of some sort?

3. Is anyone here currently residing or investing in Houston Texas?

4. I have been looking at properties, but I am unsure of how to establish their actual value. When I click on Tax Information on most websites, it has an appraised value but no date of the appraisal. Almost every property I have looked at is listed for 100k or more over the appraised value. Does this mean the market is high and it's a bad time to buy, or could the appraisal be old? How do I determine the actual value of a property so I can make offers for 80% of that value?

5. I spoke with another military member today who is separating and will receive $147,000 (pretax) for separation, but they have no plan for their money or life after the military. I explained my plans and convinced them to start a new company with me, investing 20-50k into the business to use as a down payment on an investment property. What are the different rules or factors that change for a property purchase if you do it with a company name instead of in the name of an individual?

6. Is renting to fellow college students I meet in school a bad idea?

These are all of the questions I can think of so far. Thank you in advance for your time and assistance to anyone who finishes reading this long post and is kind enough to respond. I do greatly appreciate all guidance and wisdom shared!

Very Respectfully,

Cameron

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Greg Fend
Investor · Harker Heights, TX · Member since 2013 · 69 posts · 17 votes
12y

Hi Cameron, good luck on your transition!

A couple of notes I'd mention:

"1. To qualify for a home loan, my understanding is that I must be employed and show my income. Part of my dilemma is that I move to Houston in either December or January, but don't officially separate until March 31 2015. I can seek employment, but I cannot be hired until I receive my DD214 upon separation." I'm assuming that you have a good amount of leave saved up and are taking terminal leave. The good news about that is that until your FINAL ETS date, you in fact are still employed by Uncle Sam, with 7 years of employment history. Use that to your advantage if you can.

"I wanted to purchase a property prior to my departure from here (Okinawa, Japan) so I have an address for the military to ship all of my household goods to." Don't be too worried about this. Normal HHGs take at least a month to get to you from overseas, at least with my experience of receiving mine in Korea. I also think you get 90 days of storage on the government's dime before you have to pay or schedule delivery. It should say in your orders.

As to the rest of your questions, keep digging on BP, you'll find a wealth of information on how to work with local realtors to find out comparable prices in the area you're interested in, thoughts on partnering, and planning out your investment strategy.

Good luck to you, and welcome to the site!

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  • Bryan L.
    Residential Real Estate Agent · Cookeville, TN · Member since 2013 · 1k+ posts · 948 votes
    12y

    @Cameron Miles - There's two people that you need to be speaking with in Houston that can answer many of your questions.

    1. A really good local Realtor. And that Realtor should be able to point you to person number 2. You might want to find a good Realtor who is also a vet.

    2. A really good local mortgage person who does VA loans - preferably someone who is also a vet.

    0Reply
  • Malik Roley
    Houston, TX · Member since 2013 · 30 posts · 2 votes
    12y

    Welcome to BP and thank you for your service. I am also in the Houston area with a investment strategy and goals. Perhaps we can work together or help each other out in the future.

    0Reply
  • Cameron Miles
    OP
    Duplex Investor · Humble, TX · Member since 2014 · 16 posts · 1 vote
    12y

    My thanks to both of you! I am looking up real estate agents now to ask my questions to. If anyone has a great referral please feel free to share!

    Regards,

    Cameron

    0Reply
  • Account Closed
    Residential Real Estate Broker · Austin, TX · Member since 2014 · 146 posts · 21 votes
    12y

    Hi Cameron welcome back. If it were me I'd wait until I were here so I can do the traditional home walk throughs and make sure you pick the right home and neighborhood for you and your kids. It's possible to buy a home remotely but it's not the best situation and the chances for making a mistake are much higher.

    My wife and I and my son stayed in an executive suites hotel (hotel with kitchen, cable and computer acces, living area, etc. It was only for 2 to 3 months but it gave us the time to pickout the perfect house and neightorhood.

    You can put your furniture in a nearby storage area.

    That's my two cents.

    0Reply
  • James Wise
    Real Estate Broker · Cleveland Dayton Cincinnati Toledo Columbus & Akron, OH · Member since 2013 · 30k+ posts · 20k+ votes
    12y

    @Cameron Miles welcome to the site.

    0Reply
  • Greg Fend
    Investor · Harker Heights, TX · Member since 2013 · 69 posts · 17 votes
    12y

    Hi Cameron, good luck on your transition!

    A couple of notes I'd mention:

    "1. To qualify for a home loan, my understanding is that I must be employed and show my income. Part of my dilemma is that I move to Houston in either December or January, but don't officially separate until March 31 2015. I can seek employment, but I cannot be hired until I receive my DD214 upon separation." I'm assuming that you have a good amount of leave saved up and are taking terminal leave. The good news about that is that until your FINAL ETS date, you in fact are still employed by Uncle Sam, with 7 years of employment history. Use that to your advantage if you can.

    "I wanted to purchase a property prior to my departure from here (Okinawa, Japan) so I have an address for the military to ship all of my household goods to." Don't be too worried about this. Normal HHGs take at least a month to get to you from overseas, at least with my experience of receiving mine in Korea. I also think you get 90 days of storage on the government's dime before you have to pay or schedule delivery. It should say in your orders.

    As to the rest of your questions, keep digging on BP, you'll find a wealth of information on how to work with local realtors to find out comparable prices in the area you're interested in, thoughts on partnering, and planning out your investment strategy.

    Good luck to you, and welcome to the site!

    1Reply
  • Wade Sikkink
    Real Estate Investor · Lincoln, NE · Member since 2013 · 584 posts · 353 votes
    12y

    @Cameron Miles First off, thank you for your service.

    I'll just comment on your partner. Consult a lawyer before entering into a partnership transaction. You want to have everything clearly spelled out in writing for the partnership and want to have your entity papers drawn up correctly. Nothing will make a business deal go sideways quicker than unclear expectations or assumptions regarding the relationship.

    Good luck!

    1Reply
  • Cameron Miles
    OP
    Duplex Investor · Humble, TX · Member since 2014 · 16 posts · 1 vote
    12y

    Thank you to everyone who has responded so far!

    @Wade Sikkink Does the lawyer I consult need to be a Real Estate Attorney or some type of business/corporate lawyer?

    @Greg Fend Yes, I will be taking 30 days PTAD and have 60 days of terminal leave. I understand I will still be employed, but I expect I will be asked when I separate during the loan process. I am sure more questions will arise when I notify them of my separation date. I am attending the separation classes this month and will do smooth move classes to find out the storage possibilities. Thank you for the info!

    @Account Closed My parents live in Austin and I was thinking of living with them for a few months until I could close on a property, but my concern is trying to start college classes in January and working a job in Houston if I have to drive back and forth to Austin. My mother is actually a realtor for Austin and my father is a loan officer, but they don't have licenses or access to the lists in Houston. Also, working with family can be a slow process. She answers a lot of my questions, but I am lower on the priority list because her clients bring her money and I bring her love.

    Regards,

    Cameron

    0Reply
  • Joe Haas
    Real Estate Broker · Houston, TX · Member since 2012 · 40 posts · 2 votes
    12y

    Hi @Cameron Miles ,

    I would be happy to help you when you are ready. I was AD Army for 8 years and did ROTC at UH. I work with some excellent lenders that do VA lending. Feel free to reach out. Thanks.

    0Reply
  • Leigh Ann Smith
    Manvel, TX · Member since 2014 · 309 posts · 127 votes
    12y

    Hi @Cameron Miles , I agree with @Greg Fend about your employment status. You are employed until separation. I don't believe the mortgage company will ask about your future plans, but a realtor should be able to tell you for sure.

    I will also chime in and say that you should wait to purchase a place until you get to Houston. We have looked around a little bit for properties not far from U of H (with the idea of renting to students) and a lot of them are in some pretty rough neighborhoods.

    Nevertheless, you could be studying the local market for the next few months until you return, as well as making the contacts recommended above and learning all you can about REI. Have you been listening to the podcasts? I am listening to 1-2 of them most days and am learning so much!

    0Reply
  • Cameron Miles
    OP
    Duplex Investor · Humble, TX · Member since 2014 · 16 posts · 1 vote
    12y

    Hi @Leigh Ann Smith , thank you for your response! The problem that concerns me is if I use my VA loan (which isn't my only option) then I have to reside there and show proof of my orders heading to that area. This is what USAA told me last year when I was looking to purchase in a possible duty station change. The problem this time is that the orders I have are to report to California for 10 days to be separated. I know USAA and Navy Federal will definitely know what this means and ask about future employment.

    I could use vacation days to visit and view properties ahead of time if I needed to. My original goal was to have a place to ship my household goods to etc, but storage might be my best option.

    For location, I am looking as far as Galveston. I don't necessarily want to live near the university. One of my options for tenants is to respond to other students looking for a place to live and say "Hey, I just moved into this great fourplex and I think one of the other units is available... " If they don't have a vehicle we could work out a carpool situation. I don't want anyone to know I am the owner, so I will need a property manager so I can just be another "neighbor" while keeping an eye on my investment and calling the property manager when I see issues.

    I am definitely continuing my education and LOVE the podcasts!! They are hilarious and informative so I listen to them daily.

    0Reply
  • Leigh Ann Smith
    Manvel, TX · Member since 2014 · 309 posts · 127 votes
    12y

    @Cameron Miles , I'd be careful about commute time if you are going to be going to school and working. In normal traffic, it's about an hour and 15 minutes from Galveston to U of H, more during rush hour.

    Another thing to think about is that the semester starts in January. Everyone should have their housing in place by mid-January. So, it may be difficult to get student renters in there that first semester.

    This is just me, but I think rather than getting friends or classmates in there and trying to keep them from finding out you own the property, it would be better to get complete strangers and be upfront with them about it. That way it will be easier to be hard-nosed and evict someone if you have to.

    There are tons of international students at U of H, and there are also tons of international (mostly Chinese) researchers who work at the Texas Medical Center. I figure if a student has enough money to come here from another country to study, he can probably afford his rent. The researchers are making a decent salary, so they also should be able to pay. The researchers are sometimes only here for a year or so. That means there is turnover, and new people arriving all the time.

    You might want to contact the housing office at UofH. Explain what you're trying to do and ask them if they do any rental referrals from their office. Maybe they could even give you some idea of what rent would be typical.

    Let us know if you have more local area questions!

    0Reply
  • Cameron Miles
    OP
    Duplex Investor · Humble, TX · Member since 2014 · 16 posts · 1 vote
    12y

    @Leigh Ann Smith , thank you very much for the advice! I really do appreciate it and you gave some very valid points as well as great ideas. When I get further along in the purchasing part, I could use some good referrals for local contractors and other services needed.

    0Reply
  • Jaclyn B.
    Investor · Austin, TX · Member since 2014 · 62 posts · 21 votes
    12y

    @Cameron Miles 

    Hi Cameron, welcome to Bigger Pockets! On the issue of renting to students: I've house hacked and rented out rooms in my home to students and it has gone very well. I just make sure to lay out a very specific lease and make sure they know that while we may be friends/acquaintances, this is a business transaction. It's a little different because it's harder to avoid paying rent when you live in the same house. 

    That said, if you do want to rent to folks you know, choose people you know to be financially responsible and trustworthy. I think it could be useful having people know you own the place and will be living next door. The people who are uncomfortable living next to the owner (for whatever reason) will self-screen themselves out.

    0Reply
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