All Forum Posts by: Sean Hudgins

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.

The On the Market Podcast just had Vacasa's top 5 STR markets, and Navarre was number 5. I am not in the Pensacola market myself, but Navarre is only about 45 min from Pensacola, and if you are living there for only a year, the commute may be manageable. Then maybe you could turn it into an STR after you leave or find a place that you could rent out an ADU or something similar while you live there to offset your expenses.

I just wanted to provide an alternative option that hasn't been mentioned yet. The Advice above is also good, and definitely find out how much VA eligibility you have left as a second VA loan may be better than the FHA option.

Good Luck!

Welcome to the community and the real estate game! You have the right idea; get that next one, and if a small multi is doable in your area, that is 100% the way to go. Check your eligibility; you will likely be able to finance two properties under each of your eligibility before you run out (obviously, depending on the price point). Also, keep your pulse on mortgage rates, and when they come down, I would refinance out of as many of the VA loans as possible depending on your equity, thus freeing up your eligibility again.

You called yourself "analysis paralysis rookies," so based on what I said above, you have min 3 years of primary residence hopping before you are going to face many challenges. So I suggest you get moving, and I promise by the time you get to that point, you will have a totally different outlook on the process and the knowledge and skills to confront that eligibility obstacle.

Pro tip: Find a VA Assumption deal and get into one of those sweet low-interest-rate mortgages. This may take some creativity, and you may also need to tap that equity to pay the equity difference on the assumption.

Get started and lean on the community when you hit obstacles. Everyone here is great at helping solve problems; someone in this community has probably dealt with whatever issue you may be dealing with.

As others here have already said, CONGRATS! You all are doing great and have a fantastic mindset. 

I love that you are in Jacksonville because you have a large military concentration there with the Navy base. If the end goal is financial freedom ASAP, trading in the depreciating asset for a cash-flowing appreciating one is a great idea. 

I would love to throw out an idea on how you do that. You have a place to live now in the camper; find a great agent in the area who is familiar with the VA Assumption process. You are in an excellent position to try and find an assumption deal since you have the eligibility to trade. The only thing that will slow down the process is only having 30k in savings. Be patient and try to find a deal where the seller has very little equity or look into a HELOC on one of the other properties or a lender willing to do a second position mortgage on a va assumption. However you approach it, take the time to find that assumption deal and get one of those low rates.

While you are in that search process, if you can find a big home that could support some rent by the room, it sounds like you already have a roommate lined up. You are also close to the beach, so have you considered STR or house hacking an STR home? You may want to keep the camper, buy a home near the beach, and stay in the camper on the weekends when you have Airbnb guests.

@Ryan Thomson has a good point as well. Don't worry so much about what your friends and family are telling you about being over-leveraged. You have a dual income and cash-flowing assets; now is the time to leverage and take a little risk. From someone who went from dual O-3 pay no kids to self-employed and a stay-at-home mom of 2, I wish I had taken more risk when we had the dual income.

I have noticed a lot of agents in my area (Hampton Roads, Virginia) have been using the VA Assumption as more of a marketing move. Our market is still active enough that often, the assumption is one of a couple of offers, and they always want to go with the traditional offers.

I also posted in several places about what the assumption could be worth monetarily. The best answer I got was that, at the moment, most buyers might be willing to cover the extra carry cost of an extended closing period but are likely not willing to go much further above market value to get the house. 

I am excited to see how things play out, and I agree that the assumable option at some of the low rates could be a fantastic opportunity for buyers and sellers. I have a couple of clients actively seeking out these deals, but we are a little further from listing agents actually making the extra effort to pursue the assumption loans.

I have seen one seller willing to put a second position seller finance for most of the difference between the assumption and purchase price, but unfortunately, that seller ended up deciding to rent out for a while versus sell. I would love to see other case studies of people in the community who have been on either side of one of these deals.

 Congrats @Paul K. Can you break down some of the details of the deal? would love to see how it plays out!