House Hacking with a VA Loan — House Hacking Your VA Loan

Ever felt like you're stuck in a financial rut? You’re not alone. Many veterans find themselves shelling out rent every month with nothing to show for it. This was the case for Mike, a 100% disabled veteran working for the Department of Defense (DoD). He approached me with a pivotal question: “Should I even use my VA loan?” Spoiler alert: the answer is a resounding yes!

Understanding House Hacking

House hacking is an innovative strategy that allows you to live in one part of a property while renting out the other units. It’s a powerful way to offset your housing costs and build equity simultaneously. For veterans, utilizing a VA loan can make this process even more advantageous.

Mike's Initial Situation

In 2023, Mike was employed full-time with the DoD in San Antonio, Texas. Despite having a steady income, he was paying $1,200 a month in rent. This scenario is all too common, where hard-earned money goes to a landlord instead of building personal equity.

Mike approached me with a clear goal: to stop paying rent and make his money work harder. This aspiration is not unique to Mike; many people seek financial independence. I recommended house hacking as the perfect solution. It’s a strategy I’d use if I had to start all over.

The Benefits of VA Loans

VA loans offer veterans a unique opportunity to purchase property without a down payment. This means you can buy a multifamily property—up to four units—while living in one unit. The other units can be rented out, providing income that helps cover the mortgage.

For Mike, the VA loan was a game-changer. It provided him with 100% financing and competitive interest rates. The absence of private mortgage insurance (PMI) also significantly reduced his monthly expenses, making it easier to manage finances.

Mike's First Property Purchase

Mike identified a fourplex in San Antonio that met his needs. Each of the four units was a one-bedroom apartment, well-maintained, and already occupied by tenants. Here’s the breakdown:

Purchase Price:
Approximately $400,000 (with the rehab included)
Gross Rent:
About $3,300 per month
Mortgage Payment:
Approximately $2,000
Property Management Fees:
About $600 per month, covering vacancy and maintenance

By living in one unit and renting out the others, Mike transformed his $1,200 monthly expense into a $700 monthly income. That’s a $1,900 shift! Not only did he eliminate his housing cost, but he also created additional cash flow.

Research and Management Tools

During the research and rehab phase, I recommend using tools like FlipperForce. This software helps analyze deals, estimate rehab costs, and manage projects efficiently. It’s a great way to stay organized, track expenses in real time, and create professional financial reports.

Mike chose to hire a property management company to handle tenant relations and maintenance. This decision allowed him to focus on his job and personal life without the daily stresses of property management. Recognizing the value of time and delegating tasks is crucial for anyone balancing multiple responsibilities.

Scaling Up

After a year of accumulating savings from his rental income, Mike was ready to scale further. He took out an FHA loan, which required a 3.5% down payment. This enabled him to purchase another small multifamily property, again moving into one of the units while renting out the other three.

Gross Rent for Second Property:
$3,900 per month
Mortgage Payment:
Approximately $2,200
Property Management Fees:
$780 per month
Net Cash Flow:
$920

By retaining ownership of the first property, generating about $2,000 a month in net cash flow, and acquiring the second property, his total monthly cash flow skyrocketed to $2,920. Mike was now living rent-free and had created a sustainable income stream.

Key Takeaways from Mike's Journey

Mike’s story illustrates several key points for anyone looking to achieve financial independence through real estate investing:

Utilizing VA Loans:
Mike strategically used his VA loan to purchase property with no money down, giving him a significant advantage.
Redirecting Financial Outflows:
By moving from paying rent to owning income-generating properties, Mike built equity and produced income.
Delegation:
Hiring a property manager allowed Mike to maintain his focus on his career and personal life, demonstrating the value of professional management.
Leveraging Investments:
His disciplined approach in saving rental income and reinvesting it into additional properties showcases the power of leveraging initial investments.

Building Wealth through Real Estate

Mike’s journey from paying $1,200 a month to generating over $2,900 in monthly passive income is a testament to the transformative potential of strategic real estate investing. It shows that with the right mindset, tools, and action plan, financial freedom is attainable.

For veterans and service members, leveraging VA loans and exploring strategies like house hacking can pave the way to financial success. If you’re interested in learning more about how to achieve similar results, consider booking a free strategy session at BudEvans.com.

Your Next Steps

Are you ready to embark on your own real estate investment journey? Here are a few steps to consider:

Research your local real estate market to identify opportunities.
Understand the VA loan benefits and how they can apply to your situation.
Consider house hacking as a viable strategy to generate income.
Consult with professionals, including real estate agents and property managers, to guide you through the process.

Remember, you don’t need substantial wealth to begin; you need the right tools, mindset, and a purposeful approach. House hacking with a VA loan could be your gateway to financial freedom.

For more information, resources, and support, feel free to reach out to EvansConsulting or explore options with Bud Evans | REVA Global Real Estate Virtual Assistants. Together, we can help you navigate your path to wealth through real estate.

Let’s get started on your journey to financial independence today!

Enlisted to Entrepreneur - Aim High!

Check out my YouTube!

I post real estate investment videos weekly!

The Power of House Hacking with a VA Loan: Mike’s Journey to Financial Freedom