All Forum Posts by: Joe Facenda

Well, maybe I stepped outside of my lane.  I am checking with my go to lenders because this is something I should know, if as @Reid Chauvin stated there is an overseas exception.  I will report back when I find out. 

I am a Realtor of 30 years who has worked with dozens and dozens of VA buyers since the Pentagon and Belvoir are in my backyard. But I am not a lender so maybe someone else will chime in. My understanding is that orders make no difference. Move in is move in. VA loans are owner occupied loans so not moving in within 60 days really makes it an investor loan which is not the intent of the VA loan.

Now if you move in and 1 month later you get orders, well, that is fine.  You can turn always turn the home into a rental but at origination, your intent must be to live there within 60 days.

A twist a lender can answer: The service member will be living there in 6 months but the spouse and kids can go early. I believe that qualifies as owner occupied but would like a lender to comment. 

Unfortunately, you can not buy now and move in next year using a VA loan. It is not the lender but VA loan guidelines. In fact, all owner occupied loans that follow VA, FHA, Freddie Mac or Fannie Mae guidelines require that the owners move in within 60 days of settlement.

You can only buy now and move in next year if you get an investor loan.

Yes they run about 1/2 point higher than owner occupied loans and maybe even higher than that compared to a VA loan.

But where do you see rates a year from now?  

If you get a VA loan a year from now, is your best guess that it will be higher or lower than an investor loan today?

And where will that property be priced a year from now?

In the end you may be better off buying as investor today than an owner occupant a year from now. 

Of course, VA loans are no downpayment and investors loans require downpayments so if cash on hand is of concern, then you will need to wait but otherwise, maybe buying today is the better move.

It is very rare that an investor oriented Realtor just does investment real estate. 

A healthy percentage of my business is with investors but I could never survive on just serving investors.  Market cycles change and in some cycles I would have a great investor only business and other times, I would starve.

My point is that you should look for a great agent in the market who knows investing and has personally invested.  Have them help you find your personal residence but make them aware this is not a 1 and done.  You will get their attention.

The average homeowner is now staying in their home longer than ever.  In my market recent stats indicate about 11 years. That's a long time between transactions for a Realtor.  Yes, they stay in contact hoping you will refer friends and family but having multiple transactions with an owner occupant is rare unless some life event requires a change in residence. 

Not so with investors.  Not many investors buy one property and are done!

Plus you personal home Realtor will already know you and thus you will get off to a faster start.  You will already have been introduced to his or her team of lenders, lawyers and inspectors.  Things will go smoother then if you started from square one with someone new.

Just one guy's thoughts. 

I am a Realtor in Northern Virginia.  Historically, our market is one of the best and safest when it comes to appreciation and asset protection.  However, it is in the lower tier when it comes to cash flow and that is my main investing goal.  I want to buy detached homes in B +/- neighborhoods that, while not necessarily at the 1% rule are pretty close.

Fayetteville NC fits that bill.

I started a website that connects investors with investor oriented Realtors around the country so I have a handle on several US markets.  The choices for cash flow are many but for various reasons, a few years ago I dipped my toe into Fayetteville and liked the temperature.  I have since gone back and purchased additional homes there.

It is getting harder but you can find single family homes in fine neighborhoods (with no HOA) that would sell for $120,000 to $150,000 and rent $1100 to $1300.

The base provides a steady flow of tenants.  However, know that with military tenants, you will have leases shortened by deployments. In fact, just last month, I lost a tenant when she got deployed to Europe.

If you need a great agent there, PM me or check out my site in my tagline below. 

Hope that helps.

I agree with @Jonathan Greene.  Great way to narrow down the options. 

I am a Realtor in Northern Virginia but invest outside my area because while our market is one of the best in the country for appreciation, it is not a great cash flow market and I fall more on the cash flow side of the spectrum.

But where to invest?

A few years back I started a site that connects investors with investor oriented Realtors and every time I found a Realtor in a new market, I thought, "Wow that place is cool.  I could invest there."  Sometimes the options are too many.  

But I thought back on my first real estate investment 18 years ago which was in Greensboro NC.  Why there?  Well, we had great friends who lived there and we visited almost every year.  As a Realtor, I, of course, would ask our friends about their market and I came to realize that if I was going to start this investment journey, Greensboro would be a great place to start.  I understood the area, had friends there who could keep me posted on important events and the rent/price structure fit my model.

Subsequently, I have invested in several other out of the area markets.  Some of it was gut instinct when I heard something about an area or I was visiting and something made sense. And, yes, there were mistakes made but overall, it has worked out well.

Having dipped my toes into several markets, I am now starting to build up in the ones I like. 

However, I think putting all your eggs in one basket (market) in unwise.  I still believe in geographic diversity but I want to limit the number or markets I invest in and start to go deeper in the ones meeting my goals.

Hope that helps.

I am a Realtor in Northern Virginia but through my personal investing and my website I have a feel for several markets around the country.  Jacksonville is one.  My opinion (from hundreds of miles away) is that it would be a very, very hard one to get started in at this time. 

Jacksonville, Like Charlotte and several other markets around the country is being overrun by corporate investors. It is extremely hard for the mom and pop investor whether new or experienced to find a deal there. Almost certainly a new investor will not find anything on the MLS and while there are always off market deals, a new investor getting to the front of that line will also be hard.

And, last, as @Brett Nissen said, investor oriented Realtors in his market are extremely busy. They just don't have the time to hold the hand of a first timer.  Nothing against the Jacksonville Realtors but as a Realtor, myself, I know that in this low inventory environment, you need to make multiple offers before your buyer, occupant or investor, lands a home.  We only have so much time.

So give up or wait until the market cools?  Absolutely not!!!!!

Just go to a different market. 

My understanding is that some of the markets in Georgia, while still hot, give a buyer a chance to think.  While that area is close to you, there are many other places around the country that are slower than Jacksonville right now.  If you factor in property management and the numbers still work, go for it!

A personal example.

Last year I saw that the Charlotte market was exploding. I decided that I would sell my entry level detached home investment there.  We got 15 offers.  10 were corporate offers (cash), 3 were mom and pop investors (financed) and 2 were owner occupants. 

The mom and pop investors were out.  If I was selling to an investor, I was going to go all cash.  Even if mom and pop were a thousand or two higher, I would go cash.

But because I believe in individual home ownership and as an act of charity, I went back to the highest priced owner occupant and asked them to raise their offer to a bit less than the best corporate cash offer AND waive the appraisal.  (No way it would appraise at these lofty numbers.)  They could not waive the appraisal (no cash to make up a shortfall), so I sold to the corporate buyer.

I then took that money to Fayetteville, a great cash flow market.  Fayetteville is still super hot but you have a little more opportunity to think.

I suggest the same to you.  You need a market where you can buy and have confidence you made a good choice.  An experienced investor can decide in two minutes if a property will work.  Whether it does or does not, they will not have serious regrets.  They know they will make a mistake here or there. But a new investor forced to make a hasty decision will often be filled with self doubt and that is not a way to start this journey.

Just one guy's thoughts. 

I think you should but the personal residence first.   Get your self settled and them embark on your investing career. 

So do you need to do 20% down on the personal residence?  Maybe a lower down payment will not impact your payment dramatically but will help you preserve funding for the next project.

Agree with @Bill Hampton.  Since you are investing outside of the area, I assume you have a property manager.  One of the benefits of investing out of the area and having a property manager is that you have no need to deal directly with tenants.  DON'T open that door.  If you are in the area and want to stop in, certainly do but there is no need to have contact between you and the tenant outside of a visit.

This is a business relationship, not a budding friendship. 

When I visit my out of area properties, (with advance notice and permission of course) I say, "Hi, I'm Joe the owner and just want to have a quick look around."  I ask if everything is okay with the property and how they feel the property management company is doing.  I don't expect them to love the property managers.  While I expect my property managers to treat the tenants fairly and I instruct them to do most anything reasonable the tenant wants, by definition a property manager and tenant have different perspectives and neither side is ever completely happy. 

During the visit, we might engage in other light conversation but I never give my telephone number, address or leave a card.  

We all know, it is easy to go into the tax records and get the owner name and address but if they want to find me, they will need to work a bit to secure the contact info.

Hope that helps. 

@Account Closed mentioned that homes are flying off the shelves in Great Falls NY which is probably true.  In most markets inventory is low and demand high due to super low low interest rates.  It is a sellers market in most of the country.

Which is why selling now, outside of the time pressure of a 1031 could be a good idea.  Take the proceeds and buy something in NY (or elsewhere) if the numbers makes sense.  If not, wait. 

Being able to execute a 1031 vs paying taxes is fantastic but the 45 day identification period can feel short when the market it hot and you may be forced to buy a less than optimal investment to avoid taxes. 

Selling now gives you control.

Another way to avoid the time pressure of selling and the buying an investment property is to do everything in you self directed IRA but that is a story for another day.