All Forum Posts by: Sean Hudgins

 Definitely!

The VA has an entitlement amount based on your location. This can be found Here on the VA.gov site. 

So, depending on where you live, you can get another home based on the entitlement you have left. Also, if you move from a less expensive to a more expensive market, you may have more entitlement than you would have thought.

As far as the occupancy requirement, the VA and most lenders understand that life changes. So, for example, if you are living in a 2-bedroom home but you just had your third child, you can write a letter to the lender and request permission to waive the occupancy requirement in order to find a home that better suits your family's needs. Also, the occupancy requirement is pretty much disregarded if you have a PCS change of duty station to another location. It sounds like you are changing duty stations and will be geo-batching and leaving the family at the current home for a year. If that's the case, you should have no issue getting another home through a VA loan with 0 down. If you are out of entitlement, you can use the link above to see how much the VA will guarantee, and you may have to bring a down payment or go a different route, but with that said, there are a lot of 0-5% conventional products out there nowadays. I would reach out to your lender and describe your situation and see what they advise.

I hope that answered your question.

You should be able to use an attorney or title company in your state. VA assumptions are pretty standard so they should have no problem processing the paperwork for you.

Firstly, congratulations on a great deal. That hard work has paid off if you can sell it for 450-500k. With the insurance issues in FL, although a fantastically appreciating market, this deal may be a better bet for taking the cash and deploying elsewhere. Realistically, when you move, you will want property management if you live out of state, so you will be pretty far into the red every month. How long have you lived at this property doing the flip? Can you stretch it out to get the 2-year primary residence tax exclusion? 

I would keep the first rental if it's cash-flowing, liquidate the second home, and use that money to invest in the area you are moving to. Or have a healthy chunk of change for the transition to civilian life. I recently made the transition from dual active income to self-employed, and those extra savings have made that process a lot less stressful and opened up a lot of options for me.

I know someone else mentioned house hacking, but it sounds like your family is not going to be down with that strategy... My family is the same way, so I get it.

The next suggestion I go for is a live-in flip. Use your VA loan to get a primary residence that needs some love, find something that requires primarily cosmetic work, get your hands dirty, and make it a gem. The beauty of this is you have a couple of great exit strategies when you're done.

1. Live in it for two years and sell at the end of the two years, freeing up more of your VA eligibility to buy the next one. You also avoid the capital gains tax by living in it for two years. Now you have cash to put down on a rental property conventional loan, and you can go and grab the next live-in flip with the VA loan.

2. after six months to a year, move to the next property, where you can use the remaining balance on your VA eligibility to acquire and rent out the first property. Then rinse and repeat the process until you are out of VA eligibility and refi the first property into a conventional mortgage.

The key here is that you need to add that sweat equity to the properties, providing a cushion for market fluctuations and increasing the rental potential for each home. I will echo the others. You should just get started; don't get into analysis paralysis trying to find the perfect strategy.

The only downside here is that you will be doing a lot of moving, so make sure the family is on board, or else after the second move, you may be spending all your profits on a marriage counselor... just kidding.

@Brandon Durant , how you phrase this question sounds like you are buying a personal residence, and you said it was your first home. All of that tells me that you should absolutely NOT waive inspections. 

A builder is not a home inspector; they have different eyes for different things. 

What others have said is correct: sellers hate the idea of being nickel and dimed for minor repairs or pressured into repairing things to get their home sold. However, you should not remove your protections as a buyer, especially not in today's market. 

Another option for you is to do an inspection for info only... ***DISCLAIMER: I am not a lawyer and do not do RE transactions in RI, so take this with a healthy grain of salt... What I have done for clients in Virginia is make an offer with an inspection "for info only." There is some debate as to what that means and how that is written in the contract, but usually, I still submit a full inspection contingency, and the understanding is that no minor repairs will be requested. However, It does still mean that my client can pull out without losing their EMD, and if there is a major repair needed, I can still request that repair or some compensation to the buyer for the repair. This is a way to ease the seller's fear of being nickel and dimed on repairs.

Are you saying the issue the banks are having is that you are using HELOCs to finance the down payment, and the banks don't like that? If so, some parts of the portfolio may need to be refinanced to pull cash out versus using a line of credit. That will affect your cash flow for the portfolio and overall debt, but if the issue is just liquidity, a cash-out refi might solve it.

Another option would be to use the equity in the properties to secure private financing to cover the down payment.

Sounds like a great deal! What were the terms on your hard money loan? 

So the first question I will answer would be the Assumptions. They do carry the same primary residence rule as a normal VA loan, so you will need to assume it and occupy it for a set period.

I would say your thought about moving and buying a home in the Midwest is a decent idea; I don't know that I would move to somewhere in the Midwest to invest in one live-in flip if I was not planning to stay in that location. Especially if you are doing primary residence hopping every year or so, I would do that in the market you want to live in. and then maybe once you have built up a large equity pool, you sell one or find another way to fund a conventional purchase in the midwest if you're looking to maximize cash flow. 

Now, as far as assuming loans after you have used your full entitlement, that is totally doable. You will have to find sellers that are willing to give up their entitlement. But also, don't forget VA loans are not the only assumable loans out there; FHA loans are also assumable. The downside to the assumptions, in general, is that you have to occupy them for around a year, and you still have to come up with the difference in cash when you purchase.

I would consider assuming for your next purchase and trade that 286k entitlement to get a lower rate. Then I would look to refinance out of the first home or sell if it's not an ideal rental and do another assumption to get the low rates, but having some cash to put as a down payment is likely the only realistic way you are going to be able to get into these assumptions. Unless home prices drop like crazy and people are underwater, you have to bring something extra to the table to get an assumption done; otherwise, it's usually not worth the seller's time and effort to do the deal that way versus traditional financing.

Anyone can assume a VA Loan. However, if a civilian with no VA entitlement assumes a VA loan, the seller does not get their entitlement back. I will use some numbers to illustrate the problem.

The seller is in Virginia Beach, VA. According to https://lgy.va.gov/lgyhub/guaranty-calculator , the total eligibility is $726,200 (each location is different)

The seller purchased a home for $250k with a VA loan. They are now selling to a civilian for 275K on an assumption. They would no longer be financially responsible for the loan. Still, the 250k of that entitlement would be tied up in that loan until either the civilian refinance it or sells the home and pays off the loan, leaving them with $476,200 worth of VA entitlement. This is the same concept as if someone were to purchase a second or third home with a VA loan. Eventually, they will run out of entitlement.

The advantage you have as a veteran is that you can trade your eligibility to the VA and restore the seller's entitlement, putting them in a better position to go and buy another home. This makes it more attractive for you to assume a VA loan than a non-veteran.

In theory, you could assume more loans than you have eligibility for by not trading your entitlement; it's just a little harder to convince VA sellers to give up that entitlement for an undisclosed period of time.

You can absolutely purchase a second and possibly third home with VA entitlement once you either satisfy the occupancy requirement or get permission from the lender to move due to some life changes if you are buying another primary within that first six months to a year.

https://www.vacasa.com/top-markets/2023-best-places-to-buy-a...

Here is the article from Vacasa.