LIVE IN ONE UNIT AND RENT OUT THE OTHER 3 UNITS to PAY YOUR P.I.T.I. (principal, interest, taxes & insurance) & UP KEEP SO… “YOU CAN LIVE FREE” (your #1 goal with tax benefits) Most veterans do not know this!

Non-veterans can do this under FHA loan with 3.5% down

Ask your Realtor & Lender for info.

Do not let anyone talk you out of doing this as it is your biggest step to financial freedom thanks to Uncle Sam.


What most military veterans doesn’t know about VA home loans that could be beneficial to them

90% of all millionaires became so by owning real estate by starting out owning small rental properties like duplexes, triplexes and 4-plexs, not single family homes.

While a VA Home Loan cannot be used to purchase property solely for investment purposes, such as a rental home, the Department of Veterans Affairs does allow a homebuyer to use the VA Loan on a residence that has one to four units which is considered a home (residential property)– as long as the homebuyer certifies that they intend to occupy the home as a primary residence.

gray 2 storey house at daytime

Primary Residence

You must live there most of the year.

It must be a convenient distance from your place of employment.

You need documentation to prove your residence. You can use your voter registration, tax return, etc.

Renting out your home financed with a VA loan is an option. ... As a rule, VA loans are not used to purchase income property due to the owner-occupancy rule. But, once you've lived in the home, it is okay to vacate and rent out the home.

Large suburban house

How does the VA mortgage for investment property work?

You get a VA mortgage for investment property the same way you’d get a VA mortgage for a single-family residence. You’d qualify based on your income and credit rating.

However, if you want to get credit for the potential rental income from the property, the lender needs to verify that you have some landlord, property management or related experience and that you have savings to cover your mortgage payment even if the units go unrented for six months. According to the VA, lenders must verify:

Cash reserves totaling at least 6 months mortgage payments (principal, interest, taxes, and insurance – PITI), and Documentation of the applicant’s prior experience managing rental units or other background involving both property maintenance and rental.

If the VA lender determines that you have enough savings and the “reasonable likelihood of success as a landlord,” it allows you to count current or potential rental income to offset your mortgage payment.
Calculating your qualifying rental income. You don’t get to count all of the rental income when qualifying for a VA home loan. Underwriters look at the current leases on the property and allow 75 percent of the rent from the units you won’t occupy yourself. If the property does not have renters, the lender allows 75 percent of an appraiser’s opinion of the fair rental value for the units.

VA underwriting guidelines state that, “A percentage greater than 75 percent may be used if the basis for such percentage is adequately documented.”
How it actually works as of this writing, there is a 3,700 square foot duplex in Las Vegas, NV with a sale price of $315,000. The second unit provides $1,400 a month in rental income.
Assume that you put zero down and finance $315,000 plus a $6,772 VA Funding Fee. Your total monthly payment, including taxes and homeowners insurance, would be about $2,000 with a 4.5 percent mortgage rate.

If you don’t count the rental income towards your mortgage qualification and have no other debts, you’d need qualifying income of $4,878 a month to get loan approval. That’s because the VA allows up to a 41 percent debt-to-income ratio, which is your monthly debt payment divided by your monthly gross (before tax) income.

If you are able to use the rental income to qualify, you get a different picture:
The lender would offset the mortgage payment by 75 percent of the rental income
75 percent of $1,400 is $1,050
Subtracting $1,050 from your $2,000 mortgage payment gets you a payment of $950
With no additional debts, your income required to qualify drops to $2,317 a month.
Required reserves to use the rental income or potential rental income for qualifying, you’ll have to prove that after closing, you’ll have savings equal to six months of your total homeownership costs — principal, interest, property taxes and homeowners insurance.
For the example above, that’s six times $2,000, or $12,000.
VA mortgage closing costs to boost your reserves after closing, you may have to minimize your closing costs. There are several ways to do this.

You can have the seller pay your closing costs instead of asking for a lower purchase price. For example, instead of offering 97 percent of the asking price, make a full-priced offer and ask for a 3 percent credit toward your closing costs.
You can also have your mortgage lender cover these costs in exchange for charging a higher mortgage rate. In general, every point (1 percent) credit towards closing costs increases your interest rate by .125 to .25 percent, depending on the lender.

Finally, instead of paying the VA funding fee, which insures your loan, you can wrap it into the loan amount. In the example above, the funding fee was wrapped into the loan. This does increase your payment but allowing your rental income to offset your payment makes qualifying easier.
If you have a disability rating the funding fee is waived.

You can purchase a larger property for instance, 6- units if 2 veterans like a husband and wife purchase together. 8-units can be purchased if 3 veterans purchase together.
Need a knowledge VA mortgage lender?

One more reason to buy rental property: Tax cuts for landlords
Erik J. MartinThe Mortgage Reports Contributor
February 8, 2018 - 4 min read

In this article:
Recent tax changes can be beneficial for landlords, but there are some restrictions as well:
The Tax Cubs and Jobs Act gives some landlords a 20 percent deduction on the income generated from their rental property.

If you’ve purchases property via a pass-through entity, your tax rate will be lower than it was previously, and there are also new rules allowing you to claim depreciation faster.
However, the new tax law caps state and local tax deductions at $10,000. If you’re considering becoming a landlord, you’ll also need to have plenty of cash on hand for a down payment, as well as cash reserves.

New tax laws make it tempting to become a landlord:

New tax laws that went into effect this year offer a big benefit: tax cuts for landlords. That’s because those who own rental property as a business may now be able to deduct from their taxes 20 percent of rental income earned.
That can add up to thousands in tax savings. And that makes for a sweet deal if you plan to buy rental property.

Here’s an even sweeter deal

Buy a two-to four-unit multi-family rental property. Then, live in one of the units as a landlord. You may be able to collect enough in rent from the other units to cover most of your mortgage payment.

Taking advantage of the new tax laws can be tricky. Learn the facts. Crunch the numbers. And get advice from a tax planner, accountant, and/or lawyer before jumping in these waters.

How landlords benefit Mario Costanz, CEO of Happy Tax, says landlords scored a big break in the recent federal tax reform bill.

“They stand to potentially save thousands on the taxes they will file next year. The Tax Cuts and Jobs Act gives some landlords a 20 percent deduction on the income generated from their rental property,” he says.

To qualify, your total taxable income from all sources is limited: no more than $157,500 if you are single or $315,000 if you’re married. You also must operate your rental business through a pass-through entity. This means as a sole proprietor, limited liability company (LLC), partnership, or S-corporation.

Case in point: Say you own a duplex through an LLC. Your property earns $20,000 per year in net rental income. For the 2017 tax year, you would report this rental income on IRS Schedule E and pay taxes on it at your individual tax rate. If your income from all sources in 2017 is higher than $37,950 (or $91,900 if you’re married), you’d pay at least 25 percent in taxes on that $20,000. Your 2017 tax bill would then be $5,000. And you’d be left with an after-tax income of $15,000 on your rental.

“But in the 2018 tax year, you’d be able to deduct 20 percent from your $20,000 in rental income right off the top. So you’d pay taxes on only $16,000 rather than the full $20,000,” says Costanz.
More perks for rent collectors this isn’t the only new tax benefit landlords can claim.
“If you purchase your property via a pass-through entity – such as an LLC, S-corporation, sole proprietorship, or partnership – you can further minimize your tax implications. The new tax laws have effectively brought the tax rate for pass-through entities down to 29.6 percent,” says Allen Shayanfekr, CEO/co-founder of Sharestates.

“There are also new bonus depreciation rules,” says Samuel Tae, director of International Tax for Ryan, LLC. “These allow a taxpayer to immediately deduct from their taxable income 100 percent of certain capital expenditures and property improvements.”
In other words, you can claim depreciation quicker on items you spend for your rental property. This can include things like new carpeting, replacement windows, and new security lights.

There’s another perk, too
“Some lenders allow property managers to use rental income to qualify for loans. But this varies from bank to bank,” says Costanz.
Prepare for challenges experts caution that going the landlord route isn’t easy. First, consider that the new tax law caps state and local tax deductions at $10,000. Also, you’ll only be able to deduct up to $750,000 in mortgage interest.

Buying a rental property can be very costly, too
“Make sure you have plenty of cash on hand,” suggests Costanz. “Mortgage insurance is not available for investment properties. So be prepared to make a substantial down payment. This can be 25 percent down for a multi-unit property.”
Most lenders will require you to have extra cash reserves, as well.
“They can require up to six months’ worth of mortgage payments for the property you’re financing,”

— Costanz says

“It’s always a good idea to invest in assets that produce income rather than generate expenses. If you buy a multi-unit property like a duplex or small apartment building and live in one of the units, your home is making money for you. You can generate thousands of dollars per month in passive income,”

— Says Costanz

The right prep can make you a more successful landlord.
“Work with a certified public accountant or enrolled agent to make sure your tax planning and preparation is done right,” Costanz adds.

Lastly, to help lower your risks and costs, find a partner.
“There’s power in numbers,” Shayanfekr says. “Find someone you can rely on and work together with. You’re better off buying a larger property with a partner and outsourcing the management than trying to self-manage a smaller unit count property. The larger the unit count, the more diversified your risk is.”

Questions and Answers (from the VA Home Loan publication)

Still have questions? We've got answers. Email us or give us a call.

  • Can a veteran get a VA loan to buy or construct a residential property containing more than one family unit?

    Yes, but the total number of separate units cannot be more than four if one veteran is buying. If more than one veteran is buying, then one additional family unit may be added to the basic four for each veteran participating; thus, one veteran could buy four units; two veterans, six units; three veterans, seven units, etc.

    In addition, if the veteran must depend on rental income from the property to qualify for the loan, the veteran must (a) show that he or she has the background or qualifications to be successful as a landlord, and (b) have enough cash reserves to make the loan payments for at least 6 months without help from the rental income.

    For additional information about the VA Loan Guaranty Program, please visit website at:


    1. Find the property suitable for your needs. (SHOULD GET LENDER PRE-QUALIFIED PRIOR


    2. Go to a lender and apply for the loan. (See below)

    3. Present your discharge or separation papers relating to latest period of service and/or a Certificate o Eligibility.

    4. Property is appraised by approved appraiser.

    5. Estimate of property's reasonable value is determined.

    6. If application is approved, you get the loan.

    Veteran must intend to occupy one unit for at least 1 year

    You should take a property management and business course or work for a property management co. to gain knowledge & experience prior to as the lender may ask if you do.

    You should have a realtor who owns & manages small apartment rentals to help you find a reasonable purchase.

    There are tax advantages that you can get that you would not get otherwise.

    Colorado Springs has 5 military bases and are less expensive than in metro Denver.




    3 - $380K 4-PLEX’S = $1.14M

    5 - $200K SINGLE FAMILY HOUSES = $1M

    12 - $85K CONDOS = $1.02M





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