4 Plex in Colorado using VA loan

[Joseph A Gonzales]

I am looking to purchase a 4 plex using my VA loan in Colorado. I would like to stay around Denver, Colorado Springs, Pueblo or at least within an hour of one of the cities. My plan is to buy two a year. I would like to connect with others that might be looking to sell their 4plexs to me and will take a VA financing.

[Dan Weber]

@Joseph A Gonzales I'd take a look on the marketplace here:

https://www.biggerpockets.com/...

I'd also surf around on Craigslist and Fbook marketplace to see what you can find. I would suggest being flexible on location and be willing to look closer to that hour away from the cities as your area is super competitive and the VA loan is not the most desirable to a seller. One way to combat that and strengthen your offer will be to write into your offer that you (the buyer) are willing to fix any deficiencies with the home that are flagged by the VA appraiser. Most of these items are going to be small nit picky things but it can help to level the playing field between your offer and the offer from a conventional loan. Good luck!!

[Joseph A Gonzales]

@Dan Weber Yes there are no Colorado properties in the market. I checked. Thanks for the other ideas. 

[Stuart Grazier]

@Joseph A Gonzales you would only be able to buy one property using the VA loan because you have to live in it for a year as your primary residence. And you probably wouldn't be able to get a second VA loan in the same location because you'd probably have a hard time convincing Veterans Affairs that you had to move to a different residence in the same city. You would have to prove that you had some major life change that forced you to move. The VA does not look at this program as an investment tool, they look at it as a benefit to get into a primary residence so they won't let you use it multiple times in the same location.

[Joseph A Gonzales]

@Stuart Grazier I would refinance it out of the VA loan. So my VA loan would be fully open again. The property would not be under my name anymore. It would be under an LLC after I refinancing it. I am sure there is a way. Just have to find it.

[Matt M.]

Do they have to be quads? I've been seeing a lot of other plexes off market lately along with quads.

[Stuart Grazier]

@Joseph A Gonzales The VA will catch that very quickly and won't approve a 2nd loan in the same city. Don't try to bend the rules...that's called mortgage fraud.

[Joseph A Gonzales]

@Stuart Grazier I know what mortgage fraud is haha I am a Realtor and Mortgage Loan Originator, but believe me all you have to do is ASK the VA and they might make it happen / allowed. Just have to follow the VA Pamphlet 26-7. :)

[Joseph A Gonzales]

@Stuart Grazier I just do not know how it would be fraud if the veteran lived in the property for 1 year which is required and refinanced it into an LLC loan, and freed up the VA loan to buy again...

[Michael C.]

You would be better off just using traditional financing from the start if you plan to refi out of it. VA loan is great but it's not free.

Va funding fee is up to 3.6%. 
$500k purchase =$18k fee. Then you want to refi your $518k loan + more fees into traditional loan for a higher rate plus PMI (because you won't have 80% LTV in a year or less i.e. $650k appraisal) Then you want to pay the VA funding fee again on your next one. Your trying to get fee'd to death.

Put one propriety (if you can your biggest loan) into va, then leave it va. You only want to pay that fee once. You will have lowest rate on that loan and can be 100% leveraged. 

Use cash flow to save 20% down for next one. 

This is what I’m doing anyway- I paid around $12k va funding fee on first property.
The traditional loan I just did last month on my second property was about $2k loan cost with 20% down. 
If I’m putting money out of pocket I rather it go to paying down the property and not a fee.

[Stuart Grazier]

@Joseph A Gonzales I was specifically talking about your first post about trying to do 2 purchases inside a year, using the VA loan on both properties by trying to change title and refinance via an LLC on the first to free up your entitlement. This goes against the purpose of the VA loan.

[Joseph A Gonzales]

This what I got this morning from the VA site. I asked a question:

The rules for restoring your entitlement so that you can use it on the next purchase is that you no longer own the property and that the VA loan is paid off. You can however request a one-time restoration of entitlement if you have paid the VA loan in full and still own the property and get all your entitlement back to do your next purchase. However any purchases after that using a VA loan will require that both the previous two properties are sold first before you can do another VA loan.

I replied to them if both properties are under an LLC instead of the veterans name will those properties count.

@Stuart Grazier yea sorry about that. I got a little too excited while writing the message. I meant buy the property live in it for a year then refi it into an LLC loan. Then buy another one. I am just trying to see if it is legal. I will post more the more I learn from https://www.va.gov/. I am asking the housing section.