Hey Veterans, Active Duty, Reservists and National Guard Military Families! Are you thinking about an investment that can pay off both personally and financially? Let’s dive into how you can use your VA loan benefits to invest in multifamily properties. Whether it’s a Duplex, a Tri-plex or a Fourplex, these properties not only provide a place to live but also offer potential rental income.
*VA allows two non-married Veterans who will occupy 2 separate units to purchase a 6-Plex, plus 1 Commercial Unit, which is a 7-Plex, zero down. VA requirements must be met.
What are Multifamily Properties?
Multifamily properties are buildings with multiple separate living units, from two-family duplexes to larger complexes like fourplexes or 6-Unit Properties. These properties can be an excellent choice for Veterans & Active Duty looking to invest in real estate.
The Benefits of Investing in Multifamily Properties
Steady Income Stream
Owning a multifamily property can provide a consistent rental income, helping to cover the mortgage and potentially generate positive cash flow.
Community Building
For veterans passionate about creating supportive environments for other military families, multifamily properties offer a unique opportunity to foster community and connection.
Leveraging VA Loans for Multifamily Properties
Zero Down Payment
One of the standout features of VA loans is the possibility to finance 100% of the purchase price without a down payment. This makes property investment accessible for many veterans who might not have substantial savings.
Favorable Financing Terms
VA loans are known for their competitive interest rates and terms compared to conventional financing, making them an attractive option for buying multifamily properties.
No Landlord Experience Required
VA does not require that you have landlord experience, prior to purchasing a multi-family property.
Use Rental Income as Effective Income to Qualify
You are allowed to use up to 75% of the Projected Rental Income for the units you will not occupy as qualifying income. Here’s an example:
Joe is purchasing a Fourplex, using his VA Loan, with no money down. This property has 4 units, but because this is a VA Loan, Joe must occupy one unit. The other 3 units, will be rental units. The VA Appraiser estimates that each of the additional 3 units will rent for $1500 per month. $1500 x 3 = $4500. 75% of $4500 is $3375. Joe’s Lender, Veterans Lending Group, is able to use $3375 per month, as qualifying income, to assist Joe qualify for this new multifamily property.
*If Joe has no landlord experience, he must hire a property management company, to manage the property for the first 12 months…in order to use this income to qualify.
How to Get Started
Check Your Eligibility
Ensure you meet the VA’s eligibility criteria.
Get Pre-Approved for Multifamily Properties
Getting pre-approval is a great first step and helps you understand your budget.
Property Search
Focus your search on properties that meet VA loan requirements and suit your needs. An experienced real estate agent can be invaluable here.
Financial Planning
Make sure to weigh the potential rental income against your ongoing expenses to see if your investment really adds up financially.
Tips for Successful Multifamily Properties
Effective Management
Managing multifamily properties can be challenging. Decide whether to manage the property yourself or hire a property management company, especially if military commitments frequently relocate you.
*If Income is used to Qualify and you have NO landlord experience, you will be required to use a Property Management Company for the first 12 months of owning this property.
Understanding Legal and Financial Responsibilities
Stay informed about local landlord regulations and the financial implications of property investment, including potential tax benefits.
Meet with an Attorney
Protect yourself from any liability of the property by meeting with an attorney.
Meet with an Accountant
A CPA/Accountant will help you understand the potential tax benefits of owning an investment property and can help you determine if a short-term, mid-term or long-term rental is best to meet your personal financial goals.
Conclusion: Why Multifamily Properties Are a Smart Choice for Veterans
Investing in a multifamily property with a VA loan is more than just purchasing real estate—it’s a strategic move towards financial stability and community building. With the right planning and resources, you can significantly enhance your investment’s value and impact.
At Veterans Lending Group, we’re here to help you every step of the way. Ready to explore how a multifamily property could benefit you? Let’s chat!
