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Updated over 4 years ago,
Cambridge/Boston RE and the VA Loan
Hello All! First timer here, I'm 22 years old and have a BS in Aeronautical Engineering--I'm really out of my league here. I'm currently serving as a Second Lieutenant in the USAF. My current assignment is Grad School at MIT and I'm living in the Cambridge area.
I'm looking for some guidance regarding any investors in the Boston Metro area. SFR housing prices are extremely steep (especially for a first time home buyer), and I'm looking at a first time purchase anywhere between 400-800k. However because I am serving I have access to the VA loan, which qualifies me for a 2.5% APY with zero down.
However when I'm looking at homes in the area, it seems extremely difficult to find a good deal. Cap rates are relatively low ~<6%, and the equivalent cash flow for the properties I've looked at would only return ~100-300 for a month. And for everything I've heard from BiggerPockets, this low of a return for a 400-800k property is extremely low and seems to be not worth the pursuit. With this in mind, the cash on cash ROI is practically infinite because of the zero down payment, so a large part of me feels like I cannot pass up this opportunity.
The other variable involved is the owner-occupancy rates applied for a VA loan. To qualify for a VA loan, I must legally reside in the residence for 12 months; which is not an issue because my grad school program is 2 years. However, this limits the places I can invest in, since I need to be in a reasonable distance from MIT and Northeastern University (where my roommate is attending).
Being a naive first time home-buyer, I accidentally prequalified for the VA loan which I was unaware has an expiration (and I thought the credit hit would occur later after I've filed more paperwork). So I'd like to confidentially close on a property before the expiration of the prequalification, so I'm really working hard to do my due diligence and assure that I'm making an educated decision (hence why I'm here).
Looking for any guidance on the area, or just expensive areas in general and the logistics behind buy and hold rental properties in this highly inflated market. Also looking for guidance on how to negotiate prices down and if that's a possibility (I'm reading Trump's Art of the Deal and I'm not convinced that his way of negotiations is the best for SFR's), general guidance for using the VA loan (is it possible to refinance the VA loan with a conventional bank to use for another property down the line?), and any other indicators I can use to see the good deals in these markets (I've yet to see any properties that meet BP's 2%, and 50% rules of thumb).
I've been reading a lot into the housing bubble, potential crash, and problems with landlords and forbearance's that are making the housing market hard to deal with at the moment.
Looking forward to hearing and connecting with you guys and being a part of this community!