Are You an Active Service Member or Veteran? Real Estate Investment May Be For You
Veterans and active members of the military have made tremendous sacrifices to serve: from giving up time with their loved ones to putting themselves at significant risk of harm, their service should not go unnoticed. There are a variety of programs that can help them regain financial footing and build a more secure future. Investing in real estate is one way they can do this.
Why is it a good idea for veterans and active military members to consider investing in real estate? You may be able to take advantage of:
- More favorable loan terms
- Lower insurance rates
- Reduced costs for maintenance and repairs
- Better leasing and property management options
Let’s dig in a little. While you cannot use your VA loan to buy a property that is strictly for investment, you can use it to purchase a property with one to four units. As long as you occupy one of these units, you are free to rent the remaining ones. VA loans are flexible and require no money down. This can be a tremendous benefit to those who want to find both a primary residence and a source of income.
What many people do not realize is that they can use a VA loan on more than one home. For example, many active military members use the loan to purchase a residence at a duty station. When they are reassigned, they hang on to the property as a rental and can use their loan vehicle to purchase another property.
There are limits to the full loan amount: for 2018-2019, this is $484,350 (the limit is higher for 199 “high cost” counties). Let’s say your first home was $250,000 and your next was $250,000 for easy math. That’s $500,000, or a bit more than $15,000 over the VA limit. You must contribute 25% of the overage (in our example, this works out to just under $4000). Your down payment is low, has great interest rates, a lower credit threshold, and no mortgage insurance premiums.
The VA also offers an advantageous funding fee. For first time buyers, this is 2.15% if you do not put money down, and it decreases in steps for 5% and 10% down payments. After first use, it is 3.3%. Further, you can finance funding fees if your loan amount is below the VA limit; and if you have at least 10% service-related disability, it is waived altogether.
The USAA also offers lower rates on property and casualty insurance (typically for portfolios of less than four properties), and you can see steep discounts on repair and maintenance supplies at stores like Lowes and Home Depot. They also offer help for veterans who need assistance in installing these items.
There are opportunities out there for the brave men and women who have served their country. Real estate investing can be a great start on a new phase of life and a financially secure future. For more information on investing in real estate email Info@usreeb.com