All Forum Posts by: Michael S.

@Chelsea Ricketson,

I would most definitely use the VA loan, and only put something like 5 or 10% down. Here's why:

-The VA can only be used on owner occupied. Save the rest of your money to put on an investment property, because that property you will HAVE to put at least 20% down if you try to get traditional bank financing.

-The max for the VA loan is 416k (or up to about 620k if you are in certain expensive areas). If you were buying a home for only 100k I would say save the VA eligibility in case you want a more expensive home later. But that isn't the case here.

-I would only put 5% or 10% down because those are the benchmarks where you have a lover VA funding fee. I would not personally go over 10% down. Interest rates are slightly off their bottom, but still incredibly low compared to all of human history. I would finance as much of the property as you can, locking in great rates, and use the rest of your money as a down payment on a rental that will have positive cash flow where you can also lock in a low rate.

-I am not a VA loan expert, but I don't think the seller is likely to decline an offer because it is VA financing. To them, one loan is the same as another-- though cash is king.

-The VA can decline to loan on certain properties, for instance if its on a barrier island that sucks up lots of hurricanes, so have your agent do the legwork and check that the property is VA eligible. As long as it is, I say use the VA.

Background: I am also active duty military, and am a bit of a newby at real estate investing but have 2 rentals.

Basically, the VA is guaranteeing your loan, without you having to put in lots of equity. Putting a down payment of 20% defeats the purpose of the VA loan. Its like shopping at the grocery store with coupons, but leaving without taking your change.

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I am considering a similar deal to what you and you daughter did.

Did your daughter pay you rent for your ownership portion of the house? Did you and your husband take depreciation or any other writeoffs from the house?

@Robert Leonard @Jared Crain @Steve Babiak @Steven Hamilton II thank you all for the responses. In the meantime, another question has popped up based on this same issue.

I am thinking of going in 50/50 with a family member to purchase a house while holding title as joint tenants or tenants in common. I will be living in the house for about 1.5 years, all the while paying 50% of MARKET rent to the other owner. All expenses/ taxes/ insurance will be split 50/50. We plan on selling the house after I move out (maybe after renting it for a year or so).

Here is my intent, and my understanding of how the taxes would work:

The other owner would get to take depreciation on 50% of the value of the home, as well as write off his portion of expenses, taxes, etc against the rent that I am paying him.

Once we sell the place, I would be able to take my portion of the gain tax free (according to previously mentioned rules related to that portion of the tax law), while the other owner's gain would be long term capital gains.

So basically my question is: is this even possible? The genesis for this question is that the we will buy the house for 60k that is currently worth 120k based on comps and it only needs 3k in repairs. I don't want to pay all the expenses for a loan and many banks won't make loans so small or charge high rates for them. Its basically a flip that I will live in for a fear and a half.

Curious if anyone on the forum has experience with the tax-free sale of a primary residence (up to $250k if single) concurrent with military deployments.

1) As I understand the tax code, if you live in a home for 2 of the last 5 years you can sell it tax free (up to $250k if single). My issue is that I will be "moved into" the house for 2 years, but 12 months of that I will have been deployed overseas. I am single, so its not as if part of my household will have remained behind. All of my furniture would still be in the house though.

2) I have also read that a partial exemption is available for "unforeseen circumstances" such as the loss of a job. Deployments are part of the job, so its hard to argue that they are unforeseen. However, would unanticipated PCS orders (to a different base) before the 2 years are up be considered? If so, does the percentage of the exemption mean the percentage of the $250k cap you get, or the percentage of the gain that is tax free?

I am seeking this information in order to make some plans. I plan on talking to an accountant later on down the road, but I just wanted to see if Bigger Pockets might have some info first. Any help is appreciated.

Thanks all for the great info above. I have also downloaded podcast #23 with @James Vermillion but haven't listened to it yet but wanted to ask this question to get the ball rolling.

I have two rentals that I currently manage myself in town A (one that I occupy, but will be rented shortly once I PCS). I plan to continue managing themselves from town B, about a 5 hour drive away. I have a decent start on my local "team" for town A.

The issue is deployment. I am single, and I am worried about when things happen when I am deployment. Worst case scenario, do I need to give someone power of attorney in order to start eviction proceedings on my behalf? I will be aboard ship without phone access and very limited internet access. I am thinking about giving my father power of attorney to handle anything in my stead (he is semi-retired), but he is not local, and lives on the other coast from my rentals.

Anyone have any advice or experience with this type of thing?

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You mentioned:

Rental licenses.

Municipal inspection fees.

Certificate of Occupancy fees.

I have never heard of these. What city are you in that requires these licenses?