All Forum Posts by: Eric W.

I wanted to follow up on this thread because I am getting so much conflicting information on this topic. MOST things you read online say the VA assumable loan is intended for primary residence and you must occupy the home for certain amount of time.

However, according withroam.com which specializes in VA/FHA loan assumptions, you can assume va loans for investment. Below is straight from their FAQ:

"VA loan assumptions do not require the home to be your primary residence, making them a great option for real estate investors. If you’re interested in assuming a VA loan, you will be required to purchase the home in your name and have enough cash to cover the seller’s equity in the home. The seller must also be okay with foregoing their entitlement until the loan is paid off.

But, FHA loan assumptions require the home to be your primary residence. To qualify to assume an FHA loan, the property must be your primary residence for a minimum of one year. This means you must live in the home for more than six months out of the year."

So which is it? How can they definitively say that VA loans can be assumed for investment when there is so much out there saying otherwise?

1 Vote

Fort Collins, Colorado

Quote from @Cecilia Hagan:

Quote from @Eric W.:

Quote from @Cecilia Hagan:

Quote from @Eric W.:

Quote from @Cecilia Hagan:

@Eric W. - Thought you might want to check out my response to this original post too.

Hey thanks for that. Good information! How difficult or easy has it been to get tenants secured in that area? I’ve not drove up to Sherman yet so didn’t think much of it until I started reading about the chip factory going in. We were initially looking out of state for a potential move and or investment property just because the property taxes without being able to homestead, plus high cost of insurance, and harsh weather on homes made me feel like it might not be worth it. Sherman does seem interesting though because of the lower cost and growth potential.

Hey Eric - so sorry for the delayed reply. I'm going to be checking my BP more regularly. To answer your question, if the home is priced at market rent, we are seeing our rentals lease out in 25 days. The most recent numbers I pulled for Sherman and Denison SFH shows that the avg DOM for leases are right around 50.

I hope this helps!

Hey, would you say are there opportunities to find decent cash flow properties with say 20% down but also using property management? Just looking at Zillow I’m having a hard time making the numbers work between prop taxes, insurance, management on 20% Down vs cash currently earning 5% (albeit that 5% going away soon with rate cuts)

To be completely honest, there's not much right now that will give you decent cashflow without getting into a full rehab. We have seen a lot more of our investors selling their rentals than ever before in our 5 years as a company due to increasing costs across the board.

Thankfully for us, we are seeing a lot more accidental landlords who aren't able to sell at the price they want and want to rent for a year or two until the market turns around.

Not sure if that really helps!

Hey how has the market been shaping up? I have been seeing a few more interesting listings popping up.

0 Votes

Denton, Texas

Quote from @Patrick Roberts:

Not sure whether you're referring to a VA purchase or assumption. In a purchase, it's declared by the borrower on the application. If the borrower lies about that to get an investment property loan by claiming it's for a primary residence when it's not, then that's straight up mortgage fraud, which is a felony punishable by a fine up to $1m and 30 years in prison. A prominent MLO in the northeast was recently charged and stripped of his license for playing this game with his borrowers.

Also, everything is reviewed by underwriting. If the circumstances don't match what the borrower is claiming, the loan will likely be denied. VA loans, like FHA and USDA, can only be for primary residence purposes. These loans are not allowed in non-owner occupied scenarios.

For an assumption, the Servicer handles processing and execution. My understanding is that the buyer assuming the loan has to meet the same credit/underwriting criteria as the original borrower, but this is not my area of expertise - lenders are typically not involved in assumptions.

Awesome thanks for this! Yes the assumption seems to be the more grey area. I always assumed it would it was the same as buying. Only recently heard potentially different

0 Votes

Quote from @Patrick Roberts:

VA assumptions do not require the borrower assuming the loan to be a veteran, but I'm not sure if it can be assumed for an investment purchase. My guess is that it would need to be a househack-type situation, as VA loans can only be used for primary residences. I suspect this will be very difficult to accomplish for an investment use case. The other thing about VA assumptions is that the seller's (veteran) VA entitlement will remain encumbered unless the new borrower is also an eligible veteran with sufficient entitlement on their COE.

So how is the primary residence and/or occupancy requirement “enforced” for example where in the process does it come up for the buyer to prove that they intend to use it for primary residence?

0 Votes

I was always under the impression that a VA loan could not be assumed for investment purposes and that it must be for a primary residence, which typically means occupancy of the residence for a year.

However, while speaking with a company who specializes in Va assumptions, i was told that with VA is possible to assume For investment purposes and there's no residency requirement. Is this true?

1 Vote

Quote from @Cecilia Hagan:

Quote from @Eric W.:

Quote from @Cecilia Hagan:

Quote from @Eric W.:

Quote from @Cecilia Hagan:

@Eric W. - Thought you might want to check out my response to this original post too.

Thanks for this. Reinforces the reality I thought we were living in vs what my landlord friends who bought in 2020/2021 have been saying to me ie just do it. Been hesitant to pull money out of risk free 5% yield + stock market for a rental property but at some point hope to do so when it feels like it makes sense. I’ll keep an eye on the Sherman Dennison area. Seems to be a good opportunity if you can find the right property. Just seems like with rates still high + taxes + no homestead relief + rising insurance, and needing a PM (I’m in Denton co) I’d need to really find a good deal to make it cash flow well.

0 Votes

Denton, Texas

Quote from @Cecilia Hagan:

Quote from @Eric W.:

Quote from @Cecilia Hagan:

@Eric W. - Thought you might want to check out my response to this original post too.

0 Votes

Denton, Texas

Quote from @Aaron Breckenridge:

Don't try to time the market. When/if rate cuts happen, everyone is going to be jumping into something else, all at the same time.

If it makes sense at 100-130k down payment on a 200k-ish property, does that same logic work for 50-75k down payment? With that strategy you're keeping more in reserve and earning interest and possibly seeing appreciation.

So on a 200k home in Dennison the with 75k down the estimated payment on Zillow is 1,028 and rental estimate is 1512.factoring 9% management fee of 140 a month puts cash flow ~$350 a month.

would that be considered decent in this market? I realize using Zillow numbers is a really rough estimate

0 Votes

Dallas, Texas

Quote from @Samuel Diouf:

Look at people who were waiting in 2020 for prices to drop. It looks like the same pattern is happening now with rates. We can always speculate but we will never know for sure. If you buy now while rates are high when they do drop, real estate will seem like a much easier game and you will have more experience for that next one as well.

True. Where do you think housing would be had the government / fed intervention of 2020/21 never happened?

0 Votes

Dallas, Texas

Quote from @Jonathan Bock:

@Eric W.

What's your expectation/thesis for HYSA rates in several years?

I think it’s hard to say. The consensus is lower than they are now, but anything could happen. Inflation could spike again we live through another Arthur burns era. Maybe rates go even higher from here.

I get that monthly cash flow on the investment property isn’t the only factor and that real estate always goes up and now a days - going forward will probably just go up in a vertical line indefinitely, but if I don’t intend to sell the property due to tax purposes I wouldn’t be capturing the price appreciation, it would be the cash flow.

idk, I’m probably overthinking this lol. Just most of the people I know in real estate investing got started when rates and housing prices were all much lower. They’ve secured low rates and rapid equity increases due to the last few years of Fed/gov intervention.

1 Vote

Dallas, Texas

All Forum Posts by: Eric W.

Eric W. has started 17 posts and replied 57 times.

Post: VA Loan Assumption

Post: Any suggestions for people to contact for investing in the Sherman/Denison TX area?

Post: VA assumption for investment?

Post: VA assumption for investment?

Post: VA assumption for investment?

Post: Any suggestions for people to contact for investing in the Sherman/Denison TX area?

Post: Any suggestions for people to contact for investing in the Sherman/Denison TX area?

Post: Finding deals that justify pulling from HYSA

Post: Finding deals that justify pulling from HYSA

Post: Finding deals that justify pulling from HYSA