My First Deal - Using a VA Loan, Low Interest Rate

[Axl Castaneda]

Investment Info:

Townhouse buy & hold investment.

Purchase price: $380,000
Cash invested: $12,000

Purchased property using a VA loan with 0% down and a low-interest rate; lived in the property for a year and a half, refinanced to an even lower interest rate, and rented it out to cash-flow about $500 monthly.

What made you interested in investing in this type of deal?

Cash-flow, but most importantly, very high appreciation.

How did you find this deal and how did you negotiate it?

I used a realtor to help me find a deal using my VA loan. I planned to eventually turn it into a rental property because it was somewhat distressed and I needed to make renovations to the property, but in order to turn it into a property legally, I needed to live it in first.

How did you finance this deal?

VA Loan, 0% downpayment.

How did you add value to the deal?

Completely renovated the entire house to increase estimated rent and home value; this included luxury vinyl planks for flooring on main floor and basement, fresh paint throughout, new carpeting on the second floor, remodeled all bathrooms, added a shed for storage in the backyard (it's a townhouse, space is crucial in the area!), updated light fixtures, painted kitchen cabinets, replaced old appliances with new ones. All for roughly $12,000!

What was the outcome?

Once I moved out of the property and renovated to a more modern looking-property, the townhouse generated 30+ leads within the first week, and it was eventually rented in a little two weeks after the then-prospective tenants offered to pay one year of advanced rent, for a 36-month lease. I call that a great deal, especially since appreciation keeps going up non-stop, plus, I get a $500 monthly cash flow!

Lessons learned? Challenges?

I wanted to do all the work myself for this property to understand what contractors would have to do in the future for my next properties. However, this was a huge lesson for me; delays happen, especially since I have a full-time job, plus I'm a realtor full-time now. I thought it would take me two weeks to do the renovations, but it actually took me six weeks. Next time, I will find a good and trusted contractor to do the work while I manage them because I learned that time was super valuable.

Did you work with any real estate professionals (agents, lenders, etc.) that you'd recommend to others?

I was not satisfied with the real estate agent I worked with, even though she's actually a great person, but she did not understand my future plans in real estate investing. Therefore, I went to get my real estate license so that I can help others buy or sell houses, but most importantly, help new or experienced investors find their first or next deal. However, I do recommend Atlantic Coast Mortgage in Virginia. ACM understands real estate investing, and are very flexible and offer great rates.