Expert Advice Sought

[Warren Chadwick]

Good Afternoon,

I am new to the Bigger Pockets community and joined roughly a month ago after a friend recommended this site. I have to say it is a phenomenal resource and a great wealth of information, it is a pleasure to become part of such a community.

I am seeking expert advice as I am somewhat of a novice when it comes to actual real estate investing. I will admit with a bit of hesitation, that I have spent $10,000 dollars on "gurus." I have also completed five real estate appraisal courses, read many books and dedicated the past year to learning as much as possible about real estate. I can honestly say with a great deal of confidence, I am beginning to understand quite a bit about the real estate industry. Moreover, I am beginning to understand how much I don't know about the industry.

After nearly 13 years of active duty military service I am getting ready to "get out." I have three children who's lives I am determined to spend more time molding and I am determined to build a better financial future for them. Along with this decision of course comes the fact that my earned income will be dropping significantly.

My question is somewhat complex and multifaceted, and I will make my best effort to keep it as clear as possible.

I live in a property that I am in the process of inheriting from my Uncle who is in a rest home. I have been living in the house for 3 years and I'm currently fixing the property. I have put about $20,000 dollars into the property, which is a substantial amount for me at this point. However, in order to complete a full rehab on the property I will need to pull out some of the equity and make some serious repairs.

The property has $50,000 dollars left on the current mortgage right now. I had an appraiser perform a subject to appraisal and he said that with a fresh coat of paint and some other cosmetic repairs, the property would appraise for $300,000 at this point in time on the market. Once the first phase of rehab and re-finance is complete, I could then complete a full rehab and possibly force appreciation even higher to the $400,000 - $450,000 dollar range.

My current plan is to take over the property I live in, re-finance, pull out equity, and rent out that property. Then, find a quadplex in North San Diego, put 5% down (with the equity from the first home), live in one unit and rent the other three units. However, I can't currently qualify for a conventional VA loan not due to credit (750), but a fair amount of debt ($20,000) and very high child support as the only working parent.

It is my understanding that residential properties (even fourplex units) cannot use current tenants' income to qualify for a loan (please correct me if I am wrong.) However, this is the only viable option I can see working.

With one year left of active duty pay left, time is of the essence and I would be very grateful if you folks could help point me in the right direction. The equity in that property is all I have to work with at this point, so I must make it count.

My question to you all is, how would you invest this money in this situation? In your opinions, is my plan a sound one. Any and all advice or methods to make this work profitably will be greatly appreciated; and that would be an understatement.

Respectfully,

Warren