All Forum Posts by: Chris McKinley

Steven Wade I would absolutely love to connect with you and hear a bit more about your process, your properties, and anything else you have to share!

Jeff Copeland so to make the math easy, if I had a house purchased with a VA loan valued at 100k and I owed 80k on it. Could I refi from VA to conventional and use the equity in the house as the down payment for the conventional loan?

Jeff Copeland is it possible for me to do a cash out refi and then push the cash right into a conventional loan for the same house?

Jeff Copeland Thanks for the quick response Jeff!! No neither of my loans are paid off they are both still active. I was able to use a VA loan to buy my second home with no issues. I live in the first one for a year and then PCS'd to a new duty stationed. From what I've been told each house only has to be your primary residence for 1 year before you can turn it into a rental and then make a new one your primary.

Hey everyone I had a question regarding the capabilities of the VA loan, mainly its limit. I have used the VA loan twice now, once for a house at roughly 153k and another for around 164k. I understand that the limit is at 417k leaving me with roughly 100k in benefits. My question is, does anyone have experience or knowledge in using the VA loan to cover just a portion of their loan? For example, if I now wanted to purchase a property for 300k, can I use the 100k in benefits I have left to attain a loan and then put a down payment on the difference? Does it require 2 separate loans? Or is it one that's split? Any knowledge would be greatly appreciated!! Thanks in advance for the help!! Cheers -Chris

Miles Juschka awesome man this is good stuff!! #1 - does the 80% LTV apply here since the loan is currently a VA loan? #2 - does it have to be another property, or can it be the same property? #3 - is this what you would do in this situation? Essentially what I'm trying to do is open up my option to reuse my VA loan on another house. I currently have 2 properties with VA loans that are pushing the 417k limit. Of course my other option would be to simply use the equity in my first house to buy my third as conventional but I want to exercise the refinance option from above first if I can.

Is it possible to do a VA to conventional refi and use the equity in the house you are refinancing as the down payment for the house? For example - Jonny owes 80k on a house valued at 100k Jonny has a VA loan on the house and wants to refi to a conventional Can Jonny take the 20k in equity he has in the house and use that as the down payment for the conventional loan? Thanks in advance for the help. Cheers -Chris

Alexander Felice I'm also interested in hearing about what property manager you're using!!

@Denise Evans @Christy Harris

Wow thank you for all that insight!! I truly didn't know much about any of that. It's exciting to learn new stuff about this whole process every day. Makes all of us better investors so thank you. 

-Chris 

I recently learned a few lessons in property taxes courtesy of the tax code and my mortgage company that I wanted to share so they don't catch anyone else off guard.

In 2014 I purchased my first house down in Phenix City, Alabama which is right outside of Fort Benning (I'm military). I purchased the house with a 0% down VA loan and got a great deal on it because it was a foreclosure. I immediately went into the house hacking strategy that I've heard @Brandon Turner talk about so many times (though admittedly I didn't know that's what I was doing at the time haha). The house was a 5bd/3br with 3,100 sq ft that I got for 153k...unbelievable price since it was valued at over 170k then. I immediately moved in along with 4 of my friends (making it my primary residence) and they began to pay rent which covered my mortgage.

Since we are all military we were only there for a year. We all left and I got a property manager to list the house and I began collecting rent the month after I moved out. Everything was going smoothly with the house until just recently I was notified that my monthly payment to my lender went up nearly $300!! I inquired with them and came to find out it was because my escrow account was dramatically short of funds for some reason.

Upon further investigation I found out that my property taxes on the house more than doubled, going from $937 to $2,021. Because of this my mortgage company had to back fill that money over the course of the next year. They split it across the next 12 months which increase my monthly expenses by about $150 in addition to the increase in taxes I had to pay.

I called my county tax assessor to figure out how it was possible that my taxes could more than double in the course of a year. Especially since I check out comps in the area that had taxes below $1000 still. That is when I learned about the HOMESTEAD TAX EXEMPTION. This tax exemption basically states that if a house is your primary residence there can be a certain portion of that house that is exempt from being taxed. This is largely dependent upon the state you live in. I encourage everyone to check out what their state tax law says.

So, in conclusion, what I learned and wanted to share with you all is that if you are planning on using the house hacking strategy be wary of tax implications should you ever want to move out of the house. Once the house is no longer your primary residence you step into a vastly different world in terms of taxes.

I hope this post helps and keeps someone else from making the same mistake I did!! 

I'm also curious to find out any other tax laws people have found themselves caught up by so others can avoid them. Please share if you have any stories!!

Cheers

-Chris

P.S. don't worry too much about me and this property, I was making such good cash flow month to month that I'm still in the green even with the extra $300 payment (which will go down by $150 at the end of the year once the escrow account in fully backfilled).