All Forum Posts by: Matthew Hanson

Elizabeth,

Thanks for the tipoff on the second VA loan. I've been digging for the past hour, it's called a Second Tier VA Entitlement. ( Here is a link with plenty of information http://www.militaryavenue.com/Articles/Second-tier+Entitlement+and+VA+Loans-30941.aspx for others ending up here)

On your other points, I don't mind living with others. I've been married. I'm a high-risk investor and very comfortable with it. Not everyone is comfortable with that type of investing. My back-up plan is to simply move out and rent the place completely, and manage the property.

Your technique of buying a property with an eye for rental in the long term is the way I've been looking as well. It's the only way to do it!

-Matt

Also, if anyone here is reading this, and agree OR disagree, please comment. I need to verify if I'm wrong AND if I'm right, so verification and/or telling me my incorrect-ness is more than welcome.

Can you show me the documentation on multiple VA loans? I've never heard that you can own two VA loan properties at once, and have even been told the opposite by a few people (Granted they weren't VA employees).

On the amount, if you'd look them up ( http://lmgtfy.com/?q=VA+Loan+Limits+for+High-Cost+Counties ) San Francisco, which I identified above, has a 987,000 limit.

I understand your logic on the cheaper properties, and those are two methods of gaining wealth.

1: Large assets, let tenants and room renters pay mortgage, and gain wealth through property value increases.
- This is useful in that you gain more long term wealth, but little to no immediate standard income

2: Multiple smaller properties, rent them out, and earn small amounts of income through renting higher than your current mortgage.
- This is useful in that you get immediate income through renting, and can live off that income. The negative in this is that you lose the ability to build amounts of wealth at the expense of that immediate income.

Two perspectives, and both do work. If at all possible, I'd prefer sacrificing immediate income in order to gain wealth through property value. And, as I understand it, 5% in a property worth 1m is a lot more money than 5% in smaller properties.

Hi all! This is my first post here on BiggerPockets.

I've been thinking about a few things, and had some pretty deep conversations with a friend who is fairly wealthy, and is building up his portfolio.

Here's my circumstance. I'm 27, and have a decent bit in the bank. I also own a property financed through a VA loan, I put nothing down on that property. I currently owe about 255k on it, and it's worth should be right around 295-300k. It's been refurbished and is in immaculate modern condition.
Current outgoing on that property monthly after all bills are 1650. Incoming is 2125 monthly. with an excellent renter.

The VA loan can only be pulled one at a time. So in order to pull a new VA loan, I have to sell my other property.

The couple of people I've talked to have put these ideas in my head.

The less real cash you have invested in a property, the more money you earn when the property value rises.

I can get up to 987,000 in a loan, 0% down, through the VA. If I were to pull a loan for near the max amount, and rent out rooms for the bulk of the outgoing, I can live fairly cheaply in San Francisco, while building a much much larger amount of wealth by owning a more expensive property.

The properties that are out there for this amount, I could cover roughly 60-80% of my costs just by renting out the rooms. Even if values drop, I would still be able to live there at a decent rate, and wait it out. I'm looking long term, no trying to flip properties.

Now, the questions are as follows.

How can I find out whether rental rates and property values are tied together? Judging from the knowledge I have, it seems that even if property values dropped in SF, rental rates will stay the same, due to lack of space.

Does this seems like sound advice? Leveraging high amounts of debt to build equity? My friends have done this, and have been able to build enough equity to purchase second and third properties by buying in metro-areas, in high valued neighborhoods with high rental rates.

Not many people have the ability to buy a near 1m property, without having to raise over 200k in a downpayment. I have a luxury not many people have due to the VA loan.

Cheers,
Matt