Using the VA Loan as an Investment Strategy

Dated: February 12 2023

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Using the VA Loan as an Investment Strategy

Are you crazy? You can't use your VA loan as an investment strategy!  You only get 1 VA loan OR you can only use 1 VA loan at a time! You can't rent out a home that has been purchased by a VA loan.

WRONG!

As long as you occupy the purchase as a primary residence, typically for a year, within certain guidelines, you can use that home as a rental and purchase as many homes as your $726,000 entitlement + bonus entitlement will allow. There are distance limitations, however, these can be overcome at times by justifying the following purchase based on life changes (increase, decrease family, job, health, etc...). If you are active duty and PCS to another state it is pretty straight forward.

If you ask any true investor what some key terms they look for in an investment property, they will tell you minimizing capital and low interest rates. The VA offers zero down (zero capital tied up if seller pays closing costs) and historically low interest rates. Compare that to a typical investment purchase that requires 25% down (tied up capital) and an interest rate that is usually 1% higher. 

Another benefit for active duty member leasing their home out is IRS code 523. Caveat that I am not a licensed CPA, IRS code 523 with give you an extension of 10 years on capital gains extensions if you live in the home initially for two years and then PCS away. Investing is about obtaining best terms, using as little capital when you get in to the investment and paying as little taxes when you exit the investment.  Using your VA benefit covers all of these!

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TJ Courtney

TJ Courtney is a certified Military Relocation Professional, and has been a licensed REALTOR® since 2015. With TJ, you are not only getting a REALTOR® who is experienced in real estate negotia....

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