How to Invest with the VA Loan: Debunking Myths and Maximizing Benefits

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Hello everyone, Danny here from Romeo Echo Real Estate. I recently took a week off to celebrate my birthday with family, and now I’m back and excited to dive into a topic that's close to my heart: investing with the VA loan. As a veteran-owned and operated real estate group, we at Romeo Echo Real Estate are committed to helping fellow service members and veterans maximize their benefits. Today, we're going to dispel some common myths about the VA loan and show you how to use it effectively for real estate investment.

Myth-Busting: The Truth About the VA Loan

There are three major myths about the VA loan that I want to clear up right off the bat:

1.Myth: You can’t reuse the VA loan.
   - Truth: Yes, you can reuse the VA loan.

2. Myth: You can’t invest with the VA loan.
   - Truth: Yes, you can invest with the VA loan.

3. Myth: You can’t have multiple VA loans.
   - Truth: Yes, you can have multiple VA loans.

I’m living proof of these facts. I used a VA loan to purchase a fourplex, which is an excellent investment. My colleague Roland has multiple VA loans for properties in different states. It’s entirely possible to reuse your VA loan, invest, and hold multiple properties simultaneously.

Understanding VA Loan Entitlement

When you purchase a property with a VA loan, you use what’s called entitlement. Entitlement is based on whether you’ve used the VA loan before and the loan limits of the county where you’re buying. For example, in LA County, the limits are quite high, allowing for the purchase of multi-family properties. 

The bank looks at the current rents of the property you're interested in to determine your pre-approval amount. For instance, I was pre-approved for a single-family home at a low amount, but when I shifted my focus to a multi-family property, the rental income was considered, significantly increasing my purchasing power. This allowed me to buy a fourplex where the rents cover the mortgage, making it a great investment.

Investing with the VA Loan: A Long-Term Strategy

Real estate investment is a long game. It’s not about getting rich quickly but building wealth over time. My fourplex has appreciated from $860,000 to over $1 million in just two years, illustrating the potential for long-term gains. While I’m not making a fortune in monthly income, the property is self-sustaining, covering its repairs and other costs through rental income.

Buying Multiple Properties with the VA Loan

It’s entirely possible to buy multiple properties with the VA loan by using what's called bonus entitlement. For detailed information on how to leverage bonus entitlement, I recommend checking out my buddy Josh Payne's video. But in short, you can buy additional properties by maximizing your entitlement and strategically purchasing properties at each duty station you’re assigned to. The VA understands the transient nature of military life and accommodates this with flexible entitlement rules.

Pro Tips for Maximizing Your VA Loan Benefits

1. Buy Multi-Family Properties First:
   - If you’re a service member, start with a multi-family property. This is a great way to invest because the rental income can cover your mortgage, and you’ll build equity faster.

2. Understand Entitlement and Loan Limits:
   - Entitlement and loan limits are crucial concepts. They determine how much you can borrow and how many properties you can buy.

3. Long-Term Investment Mindset:
   - Focus on long-term gains rather than short-term profits. Real estate is about building wealth over time.

4. Take Advantage of Bonus Entitlement:
   - Use bonus entitlement to purchase additional properties, especially at different duty stations.

5. Joint Purchases for Married Service Members:
   - If you and your spouse are both service members, consider buying properties separately and then together. This maximizes your entitlements.

The VA loan is a powerful tool for veterans and service members, offering zero down payment, no PMI, and lower interest rates. Understanding and leveraging your entitlement can help you build a robust real estate portfolio. If you need personalized guidance, Romeo Echo Real Estate is here to help. We’re dedicated to serving our fellow veterans and ensuring you get the most out of your VA benefits.

Remember, real estate is a long game. It’s not about getting rich quickly but building a stable, wealth-generating portfolio over time. If this post was helpful, share it with someone who can benefit from it. Let’s empower our veteran community together!

For more tips, check out our podcast and videos, and feel free to reach out if you need assistance. We’re here to serve you.

Have a great day, and I’ll see you in the next video! 

Danny, Romeo Echo Real Estate