VA loan to vacation rental

[Jacob Shawler]

Investment Info:

Single-family residence other investment in Jax Bch.

Purchase price: $339,000
Cash invested: $21,500

I used my VA loan to pay 5% down on a 4 bed 2 bath house that is about a mile away from Jacksonville Beach. I listed it on VRBO and AirBnB while I was away on deployment, and after I saw how well it performed I decided to keep it as a vacation rental.

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

I knew before I bought the house that I was going to keep it as an investment property. Using everything I had learned from the BP Podcast, I ran the numbers on the house and verified that it could cash flow as a traditional rental, but saw even bigger potential as a vacation rental because of how close it is to the beach and amenities.

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

I used an agent referred to me by a friend to find it (if you're ever in Jacksonville FL, look up Lindsay Ellis. She is a superstar!). I used my property inspection findings to negotiate the price down, and I expected to do that because I wanted to buy a house that needed updates so I could add value. Again, my agent was invaluable in helping me find this because it was my first house and my first deal altogether.

How did you finance this deal?

VA Loan. I opted to pay 5% down.

How did you add value to the deal?

I moved in and immediately replaced all of the carpet flooring in the house with engineered hardwood; I re-painted the entire interior; I replaced all kitchen appliances with new ones that I found at a discount at an outlet/scratch and dent; and replaced the water heater.

What was the outcome?

I have achieved Superhost status on Bnb, my listing is near the top of results for Jacksonville Beach on VRBO, I am cash flowing, and one year after my purchase I refinanced the house in order to regain my full entitlement; the new appraised value increased by nearly $100k.

Lessons learned? Challenges?

We always ask guests what improvements they would recommend, and then we block off a few days to make those improvements. I also listed the house while I was gone on deployment and did not want guests in my bedroom (so we didn't list the house as a 4bed/2bath - it was a 3/1), so we bought the doorknobs that have a keypad and require a code for nearly all doors in the house.

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

I would recommend Lindsay Ellis, my real estate agent in Jacksonville Beach, to anyone. She worked hard to help me get into a house that fit my criteria in the midst of a crazy seller's market. She actually found this house on accident as she was driving to do a video walkthrough of a house that I was later outbid on, and when she sent me the info I knew she'd found what I was looking for. She definitely goes the extra mile and it paid off!