All Forum Posts by: Damon Aniton

Keep it simple and search out rooms for rent on places like FB and craiglist or other sites and see what numbers are floating around. 

Quote from @Joshua Hardy:

Fellow veteran here... I also used VA loan to buy 4plexs!... Are you aware of your second tier entitlement for the VA loan? Based on the numbers you provided, you should still have some remaining entitlement. I calculated it for you, but double check with a lender... make sure you find a lender who specializes in VA loans, cuz most don't even know about second tier entitlement:

 To calculate the remaining entitlement for a VA loan after purchasing a home in Cook County, Illinois, we'll first determine the entitlement used for the initial purchase and then calculate the remaining entitlement based on the county loan limit.

1. You bought a home for $550,000. The VA guarantees 25% of the loan amount, so the entitlement used is:

   Entitlement used = $550,000 * 0.25 = $137,500
   

2. The basic VA loan entitlement is $36,000. Since you used more than the basic entitlement in the first loan, we will have to consider the bonus entitlement, which is based on the county loan limit.
3. In Cook County, Illinois, the loan limit is $726,000. The VA guarantees up to 25% of the loan limit, so the maximum total entitlement available in Cook County is:

   Maximum total entitlement = $726,000 * 0.25 = $181,500
   

4. To find your remaining entitlement, subtract the entitlement used in the first loan from the maximum total entitlement:

   Remaining entitlement = Maximum total entitlement - Entitlement used Remaining entitlement = $181,500 - $137,500 = $44,000
   

So, you have a remaining entitlement of $44,000 for a second VA loan in Cook County, Illinois. Keep in mind that other factors such as your debt-to-income ratio and credit score will be taken into account when determining your eligibility for a second VA loan. It's a good idea to consult with a VA-approved lender or a VA loan specialist for personalized guidance

But with $44,000 in remaining entitlement, this means the VA will back you for another property up to (44,000 * 4) $176,000! So you can get something for $176k and put $0 down, or get something higher and you'd only have to put money down on whatever amount above the $176k... So maybe you get a primary residence (SFH, or duplex or something) with your VA second tier entitlement... you and your wife can live there for a year, then it becomes another rental for you.

 Thank you for this.  I have been looking for a way to break this down an understand it for myself all day.

Ill be looking to use my 2nd entitlement later this year or early next year as well.

Quote from @Jon Lester:

Quote from @Damon Aniton:

I purchased a new duplex back in February. Best financial decision I have ever made. I rented 1 side within the first month that pays for 60% of my PITI within the first month. I am sitting on the 2nd side to see how the STR rules work out. If not I will just rent the other side as an LTR and clear 1k mo on my first property.

Glad to hear that! That's some great ROI. It's looking like they are going to make STRs all commercial-only but we have plenty of residential homes that are zoned commercially, and the permits are only marginally more expensive to upkeep.

 I know they were also gearing up for 1 per square block.  Luckily there are also no existing or expired permits on my block currently.  Either way I am furnished and ready to go.  Just waiting to see how things play out.

Quote from @Kenyatta Barthelemy:

Hey y'all! My name is Kenyatta. I'm a recent law school graduate in the beginning stages of my real estate investing journey. The plan is to purchase a residential multifamily in the New Orleans or Baton Rouge area using a FHA loan.

I'm currently in the research phase, listening to hours of Bigger Pockets podcasts and reading Real Estate Investing by Brandon Turner. I've also signed up for New Orleans REI meet ups in the upcoming weeks in hopes of making valuable connections in the local market.

Just wanted to make what is the first of many posts and say hello to everyone :) 

If anyone has knowledge of multifamily investing in the New Orleans or Baton Rouge area (or is on a similar path), feel free to connect!

There is a local loan program, I believe it is called the MCT loan.  It gives terms identical to a VA loan and is specifically for multifamily purchases.

It is a deal by deal basis.  But your returns will likely be stronger in New Orleans over Baton Rouge.  It may be a little scary but if you go higher on your purchase price, 400k and up.  Closer to 500k the better.  The property will be in more desirable locations that command better rents.  In February I purchased a brand new 3 bed 3 bath duplex for 479k at 6.18%.  My PITI is $3779.  I was able to land a tenant within the first month at $2200.  I furnished the other unit and am sitting on it until July when the STR lottery opens.  If I get a permit cool.  If not I can rent the other unit for around $2500.  So either way I am clearing 1k or more.

I purchased a new duplex back in February. Best financial decision I have ever made. I rented 1 side within the first month that pays for 60% of my PITI within the first month. I am sitting on the 2nd side to see how the STR rules work out. If not I will just rent the other side as an LTR and clear 1k mo on my first property.

You were able to use both a VA and FHA loan?

So I am trying to see if I understand my options properly.

Assuming income and credit qualify. The maximum VA loan limit eligibility is roughly 726k. I took a loan of 479K. That is a difference of 247k.

That means if I buy a 2nd residence in another city/state that will be my new primary residence I would be eligible to buy that new up at or below the 247k price with 0 down. Or a down payment of anything over that to bring me to the 20-25% down to bridge the gap in the remaining VA guarantee.

Am I understanding this correctly?

Well not too much longer from now I will be closing on my first property, of many.

I spent months, more like years, researching and investigating.  Getting my finances in order.  Or more like credit.  Then the world shuts down and real estate loses its mind.  So I waited a little longer and here we are.  I did my best to not focus on what numbers and deals looked like before now.  And didnt stress over what they could or might look like in the future.  I focused on what I could make happen in the market we are in right now.

To start off I am a vet so I had the VA loan in my favor. When I started out and got pre approved the rate I was given was 7.5%. So I started at least looking at houses. By the time I found something I was willing to put an offer on I had a 2nd pre approval and I let the bank know. I let the fight it out like hunger games for about 2 weeks while putting the house under contract. This was about the 2nd week of December. By the time the 2 banks were done fighting the rate had come down to 6.1%. So with 1% earnest money, which the bank will give me back at closing this is the deal I am walking away with.

6 bed 6 full bath duplex for 2900sft brand new construction at 479k. It has 3 and 3 up and down with 2 bedrooms having an on suite bathroom with a 3rd full size common space bathroom. I tried to come in at I believe 465k with closing from the seller. They countered at 479k with closing credit. I dropped another $750 for the appraisal which came back at 500k. Inspection period begins tomorrow so minus anything major being found wrong we will be able to close shortly after inspection. PITI will be $3738, or drop to $3420 if I decide to pay the home owners insurance up front.

LTR comps put renting 1 unit at between $2200-2500mo. Which essentially leaves me with little more or less than 1/3rd of the PITI to cover out of pocket. I have already ran the math against my budget and even if I never rented it at all I am still good. I am actually in tech so my income is already pretty high and secure. And AirDnA comps has my numbers at $325 a night with a 52% occupancy rate. So that puts me at just under 5 days a month to completely break even and own the home for nothing. And since I have not technically had to come out of pocket for any purchase or closing costs that leaves me with about 15k to furnish the day I get the keys. Or just hold it and start looking for the next property.

This is the first property and I am already calculating how fast I can secure the next.

I am guessing by the location tag you are talking about UTK.  My fiance is at UTK now working on her PhD.  I can tell you there will be a strong pool of grad students specifically.  Renting by the room there is going to come down to 2 things.  Ease of access to campus and number of bathrooms.  Rental prices in the area are a bit all over the place right now as well.

I am by no means an expert.  But I feel like there is a lot of taking words at their extremes going on these days.  I dont think AirBnB is "busting" as they say.  But I also dont think people will continue to make monopoly money any longer.  So long as the world does not go back into a lockdown aka covid people are still going to travel and still want places to stay.  But that does not mean you can just have a random property in a random city that does not see a lot of destination travel and make 10k a month any more.

Also as someone who clearly looks to increase their net worth by investing in real estate. I can at least understand why cities and states are pushing back against STR rentals. I can not in good conscience say that I dont see the effects of investors buying up properties has on local residents looking for a place to live. Either it be for rent or to buy.

With all that said. I also dont imagine there is a never ending market of travelers looking for monthly furnished rentals either. And that was even before many STR properties look to transition and flooding the market.