0% VA Loan Vs Cash out Refinance

[Robert Mendez]

Hello Bigger pockets!

I am an investor from the NY area, am planning to purchase a home with the following details:

Multi family home, 3 br downstairs, 4 br upstairs, student rental

Purchase price: 185K, needs about 8K in repairs to bring upstairs part to service. Taxes are roughly $4300 yearly. 

The house pulls in $430 per room, will be locked in with cosignment from parents (student rentals) with rent on ACH/autopay schedule.

The home is going to be rented from June 1st - May 1st, and there will be virtually no vacancies (this will be club on campus house, which I have personal connections to)

The question is this: We have the ability to utilize a VA loan and purchase the house, with this option the mortgage is roughly $1100 monthly, we will be pulling in $3000 roughly in revenue, so between mortgage, insurance, and taxes the costs is $1100, with other expenses applied it will be roughly $800-900 positive cash flow monthly.

The other option, is to utilize a cash out refinance on the current house we own ($155k owed, can get up to $200k) and then refinance the newly purchased home after the ARV increases after 6 months. We are hoping we will be able to decrease our current monthly mortgage and use the funding to buy the house, then for the first 6 months while trying to find renters quick, wont have to worry about mortgage costs from the other property.

Would like to know which of these two might be the better option and why? 

Thanks!

[Robert Mendez]

Hi David,

Thanks! I did not know that was an issue.

The VA Loan would have to be for a different property. Looks like a cash out refi or a typical mortgage loan would be the better way to go about that.