Sacramento Military Veteran Questions

[Shea Bartolino]

Hi Everyone,

I wanted to reach out to the local Sacramento community and see if I can get some advice on my current situation. A quick run down: 

I'm 28 years old and recently married. My wife and I have owned a SFH in the Natomas area since 2016 but have supplemented the mortgage payment by renting out the spare bedrooms. However, we no longer want to rent out individual rooms and wish to sell our home. My goal is to purchase a multifamily in the Sacramento area while I finish college. I wish to stay in this area due to the BAH rate (money I get from the VA to pay for housing) the San Francisco colleges enable me to have, and the cheaper cost of housing in Sacramento.

The problem I am running into is multifamily homes are either incredibly expensive or in really bad areas. My initial plan was to use the VA loan but they require the home to be in a move-in condition. This makes a lot of properties in my price range ineligible or they fall into areas that my wife and I would simply not like to live. We do not have enough cash to put 20% on a loan either.

Can I use the FHA 203(k) if I have already purchased a home (I have used the VA loan)? If I cannot find a suitable place to move to should I just keep my current home or should I find a cheaper location to rent (2000 vs 1300). I have not contacted a real estate agent yet but plan to in the near future. This would be a buy and hold property for myself which I would eventually transition to become my first full rental property.

Let me know what you think. Thanks. 

[Brian Garlington]

@Shea Bartolino

IF your current residence is NOT in your name the yes you can use the FHA or FHA203K Loan. If you have a thought of acquiring more properties within a 100 mile radius you need to go FHA or FHA203K ;loan first.

I used my VA Loan first with the thought of using an FHA203K in a couple of years but got a rude awakening when I was told that if I already own a home within 100 miles, then i can't get an FHA loan.

As for multifamily....it's a matter what YOU are comfortable with. I know what you are going through regarding wanting a small multifamily,...but only being able to find one in "the hood".  This is what I'm doing.....and it's NOT for everyone.

I bought a duplex in "the hood" in Oakland...Not every part of Oakland is bad, but my zip code is "The Worst".  I found a duplex on a "block" that is actually a pretty cool block. ....I put a renter in the other side of the duplex.....one that I personally screened....she covers most of the mortgage payment.

I bought in August of 2016 and within the next year or so there should be enough equity in the duplex where I can refi out of it....and buy another place and still not have to pay PMI because I will be able to use the VA Loan again.

Now, if you are wondering how can I get a tenant that would want to live in The Hood and be, not a good tenant but a GREAT tenant?....It's simple. She is on Section 8. Tenants that have a Section 8 tenant are actually LESS likely to give you problems, be demanding or mess up your property....why? Because they know if they do.....you can report them to the Section 8 office and they risk losing their voucher. They lose their voucher and a lot are basically homeless. Yes I was able to screen so that the tenant does not smoke (not even weed, has no evictions, no felonies, and no pets.) I had DOZENS that met the criteria that were begging to rent from me.   

Another thing you could be facing....may be income. I will be the first to say I certainly was. My gross income made it such that I only qualified for a certain amount of a VA Loan and I know the FHA has somewhat similar guidelines.....so what can you do? Again....this isn't for everyone....but what I did was started investing out of state. In particular, Cleveland. I simply did it for cash flow and to boost my income. I own 5 units in Cleveland now...and everything is 3% rule....in "C" areas. 75% of that gross income now counts as my income for the purposes of getting a loan.

Shea, what that will do for you and your wife is to allow you to qualify for a "bigger loan" with the fha and the VA.

Good luck man....and Thank You for your service.