All Forum Posts by: Jason Bohling

@Eric Lam as others have pointed out, there's no restrictions on selling like you described. I did this on several live-in flips (didn't know that's what it was called when I did it) utilizing my VA loan each time, too. As long as you have lived there for 2 out of the last 5 years and a minimum 24 months have passed since the last sale, you're golden.

How long will you be in Okinawa? The reason why I ask this is currently you have $480k of your VA loan eligibility tied up into this property. Most likely, especially if you're gone for a 2-3 year tour, prices will begin going up. If you don't move back into this same property and instead go to buy something else, you have significantly less VA loan eligibility available for a subsequent purchase. So, it may be best to sell it, take the profits and have your full VA eligibility restored for your next primary home purchase at 0% down with the proceeds from the sale available for down payments on an additional property or two.

Hi all. My wife and I used to live in Pierce County years ago when I was stationed at McChord, and we've briefly talked about moving back, buying a small piece of land down in Thurston County around the Yelm/Rainer/Olympia area and having a primary residence built. Since it's been awhile since we've lived there, what is the cost of new construction running there, nowadays? Also, are there any lenders y'all would recommend (bonus points if they are one of the unicorns who can do a VA construction loan as I'd like to use my VA benefits)?

Thanks in advance everyone and take care!

So, got a question for ya.  You were able to use an SBA loan for this?  What percentage did SBA require for down payment,how much reserves required, etc?  I had considered opening a small, boutique hotel and hadn't even considered the possibility of an SBA loan.

I agree with @Derek H. in his assessment; the Treasure Valley (Ada & Canyon County with a little Owyhee County thrown in) is a particular beast that is not cut and dry in the ability to assess it in some regards...just a few nights ago on the 10 o'clock news (channel 7) they discussed the state of the market over the last year and they noted that in the Treasure Valley/Boise metro which is nearing 800k people, there was 1 single family home that sold for under $250k and that was in Canyon County.  The prices here have gotten so inflated, mostly driven by out-of-state money that even if you did find something under $250k, its going to be in such rough shape you're going to need to put serious money into the rehab (I asked a buddy of mine whose a contractor about this scenario and he said for a 3bd 1 or 2 bath purchased under $250k you're gonna have a very difficult time rehabbing it for less that $75k based on its likely condition if it sold at that price).  The last few years Boise became an appreciation play because COVID accelerated the number of people moving here; the market had such low inventory already pre-pandemic that basic supply and demand of too little supply and rapidly increasing demand drove the prices up.  To make matters worse, on the cash flow end, the local economy couldn't support the rent increases and is struggling to afford them now even with inflation-induced wage increases.  Couple this with sellers who still have prices from last year in their heads as far as expectations and it makes a difficult scenario...Everything I've come across lately doesn't pencil-out, but there are still people investing here.  My advice is hit up some of them and see what is working.  You could look to the smaller towns such as Melba, Emmett, etc but while those may have lower price opportunities they are also going to be more time intensive and most likely significantly more hands-on.
 

Many people focus on the "entitlement amount" but the more important number to pay attention to is the ‘county loan limit'. The VA ‘loan limits' are based on county in which the home purchased is located and the unit size (SFH, duplex, triplex or quadplex). Right now, the baseline ‘limit' is $647,200 for a single family home, but can go up in more expensive counties (the same applies for the small multi's). You can definitely have more than 1 VA loan at a given time, it just reduces your entitlement. So, if you have a VA loan already for $300k, then you would deduct that from whatever county you are buying in again to come up with your remaining ‘loan limit'. In the case of not enough entitlement remaining, for example, if you have a $300k VA loan and the loan limit for a SFH in county ‘x' you want to buy is $647,200, then you will have $347,200 to use towards the next purchase. If the new purchase costs more than the $347,200 you have left, you can use your remaining entitlement and you pay 25% of the difference as a down payment, i.e. existing VA loan =$300k, $347,200 in remaining entitlement and purchase price of $500k would result in $500k purchase minus $347,200 in remaining entitlement =$152,800 difference. $152,800 difference x 25%= $38,200 you would have to pay at closing and you'd still have no PMI. An assumed VA loan would plug in place of the new property purchased in this example.

Also, you have a one-time option to have your VA loan eligibility restored regardless of how much you have used; normally you have to dispose of the property, meaning sell or pay-off to have it fully restored. I did this last year myself. I had bought my primary residence in 2019 in Meridian, Idaho with my VA loan. Thanks to our rise in equity, last year I refi'd our house out (just rate and term-no cash out) into a conventional 30-year with the same 2.75% interest rate, so that my VA entitlement could be fully restored as we don't plan to live here forever, and could then use it on our future primary residence, while keeping this one as a rental. All I had to do was fill out a form on the VA website and submit it, and after a SHOCKINGLY short time span I received the COE (certificate of eligibility) showing my fully restored entitlement.

 Well, Collin, I agree with you and thought the same thing, and it looks like we're going to get to see our theory play out.  Every indication is there will be more hikes at both the November meeting and the December meeting, and based on Powell's comments those that know believe another 75bp hike in November almost certain and a 50bp hike in December the most likely scenario, with a 75bp highly likely, which would bring the bump including the one we just had to 2-2.25% before the end of the year.  Furthermore, several Fed Presidents when polled are anticipating more but smaller hikes in the first half of next year on top of those, so while some have been skeptical about how serious the Fed is, it looks like they're not playing around.  So, I have no idea how this is going to play out short or long-term, but it won't be good.  Everywhere you look, like you mentioned, companies are pulling back, and this is very visible in the tech sector.  Just the other day, Google's CEO, Sundar Pichai was discussing new cost-cutting measures at Google such as decreased hiring, potential layoffs, and, to the horror of The Googlers...slashing travel and entertainment budgets, such as suggesting they tone down holiday parties and hold them in Google's offices instead of other venues while making them smaller in size.  So yeah, things could get bad!

  Hi @Kevin King, so I took a HELOC out on my primary for future investments as well. HELOCS, depending on lender, actually get approved pretty fast typically. I applied one day and then signed documents three days later and it was funded within the next Friday. One thing to keep in mind is how much you can take out is a little different than the calculation you typically see. For example, if you have a property worth $400k and a loan of $100k, you have $300k in equity. So, if a lender is offering a HELOC at 80% loan to value (LTV) you would assume, $300k equity x 80% LTV would equal a HELOC of $240k; in actuality they take the $400k x 80% LTV which would equal a total credit line of $320k, minus your existing $100k mortgage balance would mean a HELOC of $220k-thats a $20k difference. I mentioned this so that you can make sure a HELOC would still work for your numbers. Also, shop around because different lenders will offer different amounts. I was able to get my HELOC through a large local credit union and they were able to give me 90% LTV. Also, I would take the largest HELOC you're comfortable with, as if you use it, it will affect your debt-to-income ratio (DTI) for refinancing and other credit.

Also, as @Paul Wolfson mentioned, ask each lender what they did during the initial COVID shutdown and the GFC 2008-2010, as far as did they freeze or call their HELOCS.  When COVID hit, many lenders did freeze their HELOCS as he said, so you could not access any money you have not already accessed, some of them went ahead and canceled the HELOCS which immediately turns the balance owed into a loan.  I chose the one I did because during the GFC 2008-2010, they never called or froze their HELOCS. So I figured, if they are going to keep them open and available during that, then it should be a pretty safe bet that mine will stay open.

*I meant 3 years instead 2 in regards to timeframe in which to sell my grandma’s house. Just wanted to give the correct info.

 I live in Boise (well, Meridian, technically, but 5 minutes from Boise) and that sounds crazy high.  It seems like every other night on the local news there's a segment about how there's a massive shortage of places for rent to the point some people are moving away due to lack of rental inventory.  It's true on the sales side that things are cooling off; they're still selling but people are having to reduce prices.  A caveat is that they aren't reducing prices below what the home is worth (yet) but, from what I've seen, reducing from the irrational over-pricing we've seen in the last couple years down to actual market value or a couple thousand above.  The demand for rentals from what I've seen is still very strong.  If something had to be adjusted, I would say a slight rent reduction may help, as rents are well above what most locals can afford, and as some people (and its not many) are forced to move back to the cities they moved here from, the demand for rentals is still high but the number of people with the ability to pay the higher prices is reduced.  I would definitely talk to some other property managers.

First of all, this is a tough decision, and I wish you, your mom and y'all's family the best. These things are never easy, and I hope y'all can find the clarity you need to make the best informed decision you can.

My family ran into this same situation with my grandma a few years back. She lived in Texas and owned 2 properties with some cash in the bank. The family decided it was best in this situation to sell the properties to build up her cash, because as @Mike Hern pointed out, states can require the estate to be completely depleted aside sometimes from a few things before the government will step in as the payer for long-term care which is done through Medicaid.

Also, be aware that back in 1993 a bill was passed and signed into law (to the best of my knowledge this still stands but as always, check with an estate attorney to verify) that REQUIRES every state to attempt to recover i.e. clawback the costs incurred for the long-term care (i.e. nursing home care) paid out by the state through Medicaid. Meaning, say all assets are depleted but the house is still owned at the time of death and the government has paid $100,000 for services up until death. The house will not be able to pass cleanly to heirs with a step-up in basis because they will have put a $100,000 lien on it to recover what was spent by the government for her care. Unless you have other means to repay the $100,000 in this example, you will have to sell the home to cover the debt.

This factored into the decision to sell my grandma's properties because there was a significant likelihood they would have to be sold anyway to settle her estate. By doing this within the first 2 years of her going in there, they were able to avoid capital gains taxes on the one that was her primary residence which maximized the amount of cash built up. Otherwise, if we had waited past the 2 years, she would have paid capital gains taxes on both properties. By having the tax-break on the one it kept more money in her estate to settle her estate with.

Good luck to ya.