Quote from @Marshall Leipprandt:
@Sung Yu Hey Sung, I am just getting out of the military and have used a VA loan myself in 2020. If I were you, I would keep the property. Particularly if you plan to stay in the military and generate income in that regard, allow the cash-flow, principal pay-down, appreciation, and tax advantages of owning this 4-plex continue to work to your advantage.
Also, don't forget that the capital gains tax exclusion also applies for military if the property was your primary residence for 2 of the last 15 years (so you'd have to live there through October of 2022) >>https://www.militaryonesource.....
Your reasons to sell are all valid, however, you're now putting pressure on yourself to use your proceeds to find a good deal in this market. Freeing up the VA entitlement would also be nice but you can always refi out to a conventional when your LTV gets to 80%.
Ultimately, if you are planning to continue to stay in the military, growing your cash in the short-term seems unnecessary unless you find an incredible deal that you think tops your current 4-plex. Building wealth long-term and continuing to own this asset will serve you better especially as rents increase over time and you gain more equity.
@Marshall Leipprandt I appreciate the feedback! For the tax exclusion, I was pointing out that I will be exempt from paying long term capital gains since my reported W-2 for this year will be low enough (0% capital gains for single filer reporting below 40k). That's what attracted me (15k savings in tax), but you're right about the 2/5yr occupant rule. I'm just not sure how that applies to this fourplex because it's not entirely a primary residence. It's somewhat both primary/rental so I'll need to rely on the CPA for that...
All good points...I do plan on transitioning out so the cash reserve would help, but otherwise, it's a good property so it's been difficult to let it go. Refi option is not bad. If it's strictly considered an investment property, banks typically require 75% LTV, so it'll take a couple of years to build enough equity to allow for that (sitting at 79% LTV - 679k owed, current value 860k). My understanding is that getting the full VA loan entitlement reinstated is a one-time deal if refi to a conventional and I'm thinking if I had to choose between using that now VS saving the option for future rental properties, using it for the fourplex would be worth it. As far as other options, HELOC would be a good alternative as well with more equity built-in.
How have you used your VA loan previously and how do you plan on optimizing it for the long run?
