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Using VA Loans for Investment Properties


Going back a little, 2014, to tell you about a great article written by Alex Summers for NuWire Investor. He answers the question  "Can you use a VA home loan to buy investment properties? The short answer is no… and yes."  We would say the short answer is yes and yes but Alex takes it to a level that, love him or hate him, Donald Trump might endorse as a great way to get rich. What Alex characterizes as a loophole we see as a thoughtful inclusion, by the regulators, of properties that have the potential to substantially improve the lives and financial health of our Service people and their families. We think once you get past the to good to be true shock you will agree. Here is an excerpt for those of you who like to dream big.  

How to Make it Work

  • Purchase Property A – a four-unit home – with a VA loan.
  • Rent out three of the units and live in one to satisfy the VA loan occupancy requirements.
  • After a year, find determine your eligibility for an IRRRL. If eligible, take out an IRRRL on your Property A and continue living in the property.
  • Start the process of getting approval for a second VA loan. Keep in mind that the entitlement you receive is the amount you can borrow with no money down. You could still qualify for a VA loan, with a small down payment even if you have used up your entitlement.
  • When you are approved, start the search for Property B. You can use your VA loan to purchase an existing property, or build a new one. You can also use the VA loan to purchase another multi-family property.
  • Purchase the new property and assume occupancy within 60 days of closing, unless you meet certain exceptions. If it’s a multi-family property, rent out the remaining unoccupied units.
  • Turn rent out the remaining unit in Property A, making it a 100-percent an investment property.

If you decide to make Property B another owner-occupied rental property, you could use the equity in both properties to purchase a third investment property – either by getting another IRRL on Property B and trying the VA loan process again, or using some other form of financing.

Published on: Monday, July 21, 2014
Written by: Alex Summers, Guest Author

Read the entire article here