We sometimes get asked by our loan candidates about if they can use their VA loan as an investment. While the answer to this question depends on what you consider an investment, I can share how I used my VA loan as an investment.
The VA loan can be used to purchase up to a 4-unit house so long as it is owner occupied. These homes are also known as multi-family dwellings, and can be referred to as 2, 3, or 4 family houses. These homes are typically separated units with each functioning as a separate apartment.
In 2008 I used my VA loan to purchase a 3-family home in Massachusetts with 2 out of the 3 units rented out at $1,250 per unit for a total of $2,500 per month that I was collecting in rent. I moved into the 3rd unit and my monthly principle & interest, taxes, and insurance payment to the bank was approximately $2,700.
Through this arrangement I was able to own a home and only pay $200 ($2,700-$2,500) a month towards my monthly payment. This gave me the opportunity to have my tenants pay down my mortgage while I lived almost free in my home. Fast forward to 2012 and I now live in another home but still own the 3-family and have it fully rented out and clear over $1000 a month in rental income after accounting for my fixed expenses.
Below are some basics to consider. It is important to note, though, that being a landlord is an entirely different topic and not for everyone. Also, like most investments and being a homeowner, there is risk, so it is important to do your homework.
Overall, using a VA loan to purchase a multi-family was a great experience that has now set me up with a solid cash flow positive investment. While this was beneficial, it required a lot of work and learning along the way.
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Grant Moon is an Army Reserve Captain and CEO of VA Loan Captain, Inc., a veteran-owned business that facilitates VA Home Loan Purchase and Refinances through a platform of lenders that offer competitive rates for veterans and servicemembers. VA Loan Captain's Pay It Forward Program also provides $200 to a partner veteran non-profit of the customer’s choice for every loan closed. For more information, visit www.valoancaptain.com. If you have home loan questions, you can send them to Capt. Moon at email@example.com.
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