All Forum Posts by: Cooper Sewell

There are homes that have accessory dwelling units (ADU) or casitas already on the property. They can be searched on the MLS. As a realtor, I have a potential client that is looking for such a property and I found several in our city.

Short-term rentals are stays that are 30 days or less.

If you go this route, the only construction would be converting your garage. That could be at least two sources of income unless you rent rooms out in the main house…not sure if you want that many people around at one time.

If you have more questions, shoot me a message and we can talk more.

I am in Charlotte area and happy to have coffee to help. The VA loan idea is a good one, but the catch will be that you are using your certificate of edibility on the home and have to reside there so you need to occupy a unit. You can do this with properties with 2-4 units. The catch is if you move out of the property you need to refinance and there is a fee for that when you do and that will release your COE so that you can rinse/repeat if you want.

In Charlotte, you will struggle to likely find what you are looking for so you will have to look at the surrounding areas like Lancaster or Gastonia.   The other thing you should consider is your taxes on this.  In SC you will not be taxed on a military pension if you get it, but you will in NC.  However, in SC you have an additional tax on the property once you refinance and it is now only an investment property.  Here are two links to help you with those thoughts depending on your circumstance:

https://scdva.sc.gov/news/2022...

https://www.tax-rates.org/sout...

https://investguiding-com.ngon...

Happy to have coffee if you want to network.  There are also some investment groups in town.   Caten hosts one that I plan to go see for the first time when it comes up.

https://www.biggerpockets.com/...

How would you recommend about going along with this plan? Buy a house and build another property on it? Also short term rental how many months would classify as a STR? I would love to more about this plan.

Hey Cooper! You should use a lender. By acquiring a loan you only have to make a down payment on the property and it can be qualified based on its cash flows, if you use a DSCR lender. The triangle in NC is a busy and growing area with real estate booming right now. Try looking at some other up and coming areas as well that you can spend a little less on a MF property and still start your real estate journey the right way!

@Cooper Sewell if it works for you lifestyle I would use that VA loan and get a fourplex for 0% down by house hacking it.

You mentioned cash flow. Here is my opinion on cash flow with house hacks:

House hacking is tough to cashflow in year one (with current house price run-ups and interest rates) for a couple reasons:

1. You are living in one of the rentable units

2. You are only putting 5% down so your loan amount is much larger and therefore your mortgage payment.

I would consider your net worth ROI. What I mean by this is considering how much your down payment returns to your net worth (appreciation, loan paydown, tax benefits, AND rent avoidance). Don't forget to include rent avoidance in your numbers! You have to live somewhere.

You may need to lower your return or cashflow expectations so you can get into a house hack that will allow you to avoid throwing rent money away every month. You know this, but don't forget all the other ways real estate makes you money. Paying down your mortgage and owning an asset that will appreciate over the long term.

I recommend house-hacking a single-family residence with a detached unit. If you don't want anyone in the house, you can convert your garage and the detached unit into STRs.

With your VA loan, you can get in the game at a lower cost.

You don't need a multifamily right away. This option can get you "on base." 

Real estate investing is a long game...

I wish you all the best!

Hey Cooper! The Charlotte market is definitely expensive so I would consider some different strategies to use. Reading helps a lot and broadens your ideas on how to make something work as well.

There are different rental strategies like a medium term furnished rental and AirBNB to get into the market now so it will be waiting for you once you're out of the military. It will be a bit more work but it gives it the opportunity to cash flow if done right.

Quote from @Cooper Sewell:

Quote from @Marie B.:

Quote from @Cooper Sewell:

Quote from @Erik Browning:

@Cooper Sewell

Straight from the VA Guidelines:

Any purchaser may qualify to assume a VA loan; however, for a Veteran’s entitlement to be restored, a Veteran purchaser with sufficient entitlement must complete a Substitution of Entitlement (SOE) when the ROL is closed. The Veteran’s entitlement is not restored unless the Veteran purchaser, in addition to assuming the payment obligation, also agrees and is eligible to substitute their entitlement for the Veteran seller’s entitlement. It is important for the servicer as soon as possible in the assumption process to obtain COEs for both the Veteran assumer and Veteran seller to determine if there is sufficient entitlement in which to substitute.

VA Guideline from Ch5

Hypothetical Scenario that applies to you:

I'm assuming you are a veteran/active duty since you're posting in this forum.

Let's say you bought your home in San Diego for $300k and the county loan limit is $600k. Because the maximum amount the VA will guarantee is $600k (you can go higher than this, still at 0% down, but this illustration is in the realm of split entitlement - which is your situation, which also applies to you regarding remaining entitlement).

Your buddy's home that you want to assume is $250k. $300k + $250k = $550k.

$550k is less than the county loan limit of $600k, so it means you can assume the loan as long as you meet the DTI and credit limits.

If your buddy's home is >$300k, say $350k, then $300k + $350k = $650k, which is > $600k. In that case, you cannot assume his loan.

Handful of things:

This is only for VA to VA assumable transactions. VA to Non-VA is slightly different. The departing veteran takes the entitlement with them even though they don't own the home anymore.

You're probably asking yourself, "What's San Deigo County's loan limit?"

You're probably also asking, "how much of my entitlement did I use up already?"

First - get your certificate of eligiblity and look for the number in this location:

That number in the picture is how much entitlement you've "used up." This is a function of the loan amount. Only worry about the entitlement charged.

Then take that number, plug it into THIS CALCULATOR, select the drop down for your state/county, then see how much entitlement you have left. Do the same for your neighbor buddy, then make the comparison.

Lastly, FHA loans are also assumable, however USDA and Conventional (mostly) are not (very unique circumstances only).

You can try and find veterans and FHA folks that want to give you their home, but it's very difficult and like finding a needle in a haystack - not saying it can't be done, it's just difficult to find these people in distress.

Good luck!

 Thank you. I will definitely look into it some more.

 This is great info! What about doing a mirror wrap? Where do I find info about doing that? Is that easier than assuming a loan?

 Would you be talking about a wraparound mortgage? I was told by a realtor that assumable mortgages are the way to go because you get a lower interest rate and you pay less. I will have to look into what you are talking to get some more info on it. 

But if you're assuming it then you'd have to qualify for the loan, correct? Whereas, if you're doing a wraparound or a mirror wrap then it's basically saying that you'll pay the PITI, without needing to qualify for the mortgage. This can be a little faster if you're trying to buy an investment property instead of assume the loan and live in the property.

Quote from @Cooper Sewell:

Quote from @Erik Browning:

@Cooper Sewell

Straight from the VA Guidelines:

Any purchaser may qualify to assume a VA loan; however, for a Veteran’s entitlement to be restored, a Veteran purchaser with sufficient entitlement must complete a Substitution of Entitlement (SOE) when the ROL is closed. The Veteran’s entitlement is not restored unless the Veteran purchaser, in addition to assuming the payment obligation, also agrees and is eligible to substitute their entitlement for the Veteran seller’s entitlement. It is important for the servicer as soon as possible in the assumption process to obtain COEs for both the Veteran assumer and Veteran seller to determine if there is sufficient entitlement in which to substitute.

VA Guideline from Ch5

Hypothetical Scenario that applies to you:

I'm assuming you are a veteran/active duty since you're posting in this forum.

Let's say you bought your home in San Diego for $300k and the county loan limit is $600k. Because the maximum amount the VA will guarantee is $600k (you can go higher than this, still at 0% down, but this illustration is in the realm of split entitlement - which is your situation, which also applies to you regarding remaining entitlement).

Your buddy's home that you want to assume is $250k. $300k + $250k = $550k.

$550k is less than the county loan limit of $600k, so it means you can assume the loan as long as you meet the DTI and credit limits.

If your buddy's home is >$300k, say $350k, then $300k + $350k = $650k, which is > $600k. In that case, you cannot assume his loan.

Handful of things:

This is only for VA to VA assumable transactions. VA to Non-VA is slightly different. The departing veteran takes the entitlement with them even though they don't own the home anymore.

You're probably asking yourself, "What's San Deigo County's loan limit?"

You're probably also asking, "how much of my entitlement did I use up already?"

First - get your certificate of eligiblity and look for the number in this location:

That number in the picture is how much entitlement you've "used up." This is a function of the loan amount. Only worry about the entitlement charged.

Then take that number, plug it into THIS CALCULATOR, select the drop down for your state/county, then see how much entitlement you have left. Do the same for your neighbor buddy, then make the comparison.

Lastly, FHA loans are also assumable, however USDA and Conventional (mostly) are not (very unique circumstances only).

You can try and find veterans and FHA folks that want to give you their home, but it's very difficult and like finding a needle in a haystack - not saying it can't be done, it's just difficult to find these people in distress.

Good luck!

 Thank you. I will definitely look into it some more.

 This is great info! What about doing a mirror wrap? Where do I find info about doing that? Is that easier than assuming a loan?