All Forum Posts by: Seti Harr

Hi Tom,

Thanks for your advice. I'll be sure to evaluate the local housing climate before I obligate myself to buy anything. I will also be sure to check out my other loan options.

I've always been curious how other military members handle their investment property. What have you done with the homes you purchased when you PCS? Hold and rent? Sell when you PCS?

Thanks again,

Seth

Thank you for all your quick responses. I see I could have been more clear about the "rent from myself" thing. Essentially, I am pursuing the house initially as primary occupant, but framing it in my mind like I'm purchasing an investment house, with rent payments guaranteed over the first 4 years (from my own housing allowance).
The purpose, in my mind, for transitioning the property to an LLC after 3 years is to limit my personal liability in preparation to getting real tenants into the property. I realize I have much to learn about this before doing so. I'm not trying to build any loopholes to exploit here, just want to be ready to rent it out at the 4 year/new duty station mark.

Dion,
Thank you for the advice on the mortgage/deed. I will make sure to involve the stipulation regarding primary residence/rental property - I see I have some research to do in this department as well. I also liked what you said about targeting a specific equity level for a certain point in time, and keeping cash on hand. If I got new PCS orders, I'd probably try to rent the house out at that time, as I would have hopefully already established a positive cash-flow at competitive rents when I purchased.

Brian,
I see your point about being more clear in my reasoning for using an LLC. I will look into that more into the future. I also didn't realize you could only have one VA home loan at a time. I'll keep that in mind. I hope I cleared up the bit about "renting from myself" above.

Steven,
I like the idea of the multifamily home in order to bank more BAH. I hadn't thought of that. In answer to your questions: when I move I plan on keeping the house/unit, and using a manager. The refi to cover for the manager makes sense too, but I am hoping to make the numbers work from the start, and that won't be necessary... I realize I'm being very idealistic here.

Thank you all for your input. You have helped me see several course-corrections and areas to do further research already. Please keep the comments coming. I will definitely have more questions in the future, and I appreciate all of the kind welcomes so far.

-Seth

I've been reading this site and REI information for a long time, and have been wanting to break into real estate investing. I'm requesting some input on my plan.

First, I'm a military member, and will be receiving a significant promotion in rank/pay in May that will come with a move to a new location within the lower 48 states. I will be at the new duty station for 4 years (most likely, but there are no guarantees in the service), and be eligible for promotion twice during that time - though I'm taking neither for granted. I will receive a housing allowance (BAH) roughly equivalent to [a conservative] $15-20k/year that can either go to rent, base housing or a house purchase.

Next, my plan, 30,000-foot view: I want to purchase and live in a house under the pretense that it will become a rental property (by necessity, within a military community) when it's time to leave. Whether merely for a 1031 exchange towards the next rental property or as a buy-and-hold property for the long-term; I want to leave both options available. Based on my pay/allowance calculations, I want to keep my purchase price below $215,000, to leave room in my budget for renovations/repairs/taxes/unforeseen expenses, and will base my final purchase price on comparable rental properties in the area.

After 3 years, I would classify the property as an investment property, and hold under an LLC - relevant laws permitting, I would be my own landlord. At the end of the 4 years I will have converted approximately $60-80k of housing allowance to approximately 25% equity on a 30-year note [minus taxes, repairs, incorporation expenses, etc].

Then, the gray-area: I have some cash on hand, and zero debt. I have never purchased a house before, always been a renter/base-housing occupant. I am considering a VA-home loan (pending further research) secondary to no down payment required. I want to keep my cash reserves available for incidental expenses/taxes/closing costs/inspections etc, and pay towards principle in the future, if possible.

I realize I'm making several assumptions here, and have been light on many specifics. That's because I don't know where I'm going to get stationed yet, and want to have a rudimentary plan in place when it's go-time. Thus, I'm asking for input towards any major oversights, and if this plan is workable.

Additionally, if anyone wants to chime in on the finer points of converting owner/occupant to rental, VA home loans, and incorporating, etc. I'm all ears.

Thank you for your time, and dedication to this awesome resource.
-Seth