Profile picture for user6248096

Active duty military - want to invest in Chicago

I do not have a lot of cash for down payments but I can afford a mortgage. I plan on using my VA loan in my next duty station (Killeen TX) in February 2014. However, my parents are living in Chicago and I would like to purchase an income property less than 150k in value (for rental) that my dad can manage.

With that said, what are my options to look into for 0 or less than 10% down? Also, this is my first time buying. Please advice. Thank you in advance.
  • August 07 2013 - Chicago
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Answers (10)

FHA and the affiliated VA program have many options for buyers with low down payments and even more benefits for those with VA status.

I would suggest hooking up with a Realtor who knows that local market and can help teach your family how to effectively manage a rental property.  Then you should hook up with a local lender who knows VA and investment loans and get that process going.

I work with Veterans frequently and would be honored to assist.
  • March 05 2014
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Thank you for your services. Reach out to a mortgage lender. There are options for veterans that a lener can walk you through. If youd like a referral for a great lender let me know.
  • March 04 2014
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There are many options for you.  This is a topic we could spend weeks talking about.  I am retired military and can talk with experience about owning rentals, VA repos, HUD repos, and the many other options. I started in this area in 1995.  Strategically there is more to it than simply buying a house somewhere and having anyone manage the rental.  There are many questions that are raised even in your original plan that raise caution flags.  
Is this or Chicago the correct market to invest in? What is a good MSA to invest in?
What are the market statistics for the MSA you have chosen?
What is the relevant data on the neighborhood?
Is your property manager qualified for the job?  Sensitive subject.

I made the mistake of investing heavily in a market that did not give good returns, appreciation or demand to enable increases in rents.

After your arrival here contact me and I will spend the time to give you some preliminary advice.  Many parts of the discussion should be private so this is not the correct forum.
  • February 28 2014
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I was in your exact situation not long ago. I was stationed in Ft hood in 2009. I decided to use my VA loan to buy a multi-family home in copperas cove Tx (right next to FT Hood). You may use your VA loan to purchase a multifamily property which achieves both of your goals There are many benefits to renting to in a military community as you already know. I would suggest you look at properties near Ft Hood. If you require any information about the area or have question feel free to contact me.
  • August 08 2013
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Profile picture for Tony Mitidiero
I tend to agree with Wetdawgs regarding purchasing your primary residence first.  I believe he is recommending you to do so as your ability to qualify carrying to loans may be challenging.  It is important to understand that although you may have a property rented out, the mortgage will still be counted against your debt-to-income ratios for at least the first 12 months of renting it.  The rent you are receiving will most-likely not even be factored into the equation until you have proven experience (generally 12 months) as a landlord; even then, your tax returns will be scoured, so make sure you are correctly documenting. 
  • August 08 2013
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Profile picture for wetdawgs
You've already identified that the Chicago property is an investment property, so simply plan to pay the appropriate down payment and interest rate for investment properties.    You may not be ready to do so yet, that's fine, develop a strategy to go step by step and build up the down payment.

If I were in your shoes, I'd get the primary residence identified and purchased first.
  • August 07 2013
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Profile picture for user6248096
Thank you everyone! I do not have a lot of debt. The reason why I know that I can afford two mortgages is that my dad is experienced in real estate business (i.e., renting multiple properties in chicago area for over 20 years) and he guaranteed me that he can manage my place and rent it out pretty quickly - that will be income for me. 

I am not talking more than 100k for the chicago property and not planning to exceed 150k in TX in February. I am looking at estimated mortgage no more than $900 per month for the Chicago property and $1200 per month for the TX property (where I will use my BAH). Currently I am an O3E with 14 years of service single with no children. 

If my logic is right, the Chicago property will yield positive cash flow while the TX property will break even (due to my BAH). My problem is - the primary residence requirement for Chicago property and down payment. 

I guess I might just have to talk to a lender? Any recommendations? How's my logic? Am I out of this world? Please advice.  
  • August 07 2013
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Profile picture for Matt Laricy
I would speak with a lender. There are a lot of different options for veterans out there.

Also, we thank you for your services.
  • August 07 2013
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You will not find an investment property loan with any less than 10% down. There are however many bank owned properties that allow for a 10% Down payment with no MI.
Like Wetdawgs said, you will need to qualify for your home purchase in Feb using the mortgage payment for both homes.
Let me knwo if I can help.

All The Best!
  • August 07 2013
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Profile picture for wetdawgs
If you wish to purchase a home in Feb 2014, purchasing an investment property  today will count against your debt to income ratio when you wish to qualify for a primary home mortgage.    Do you have sufficient income and low debt so that you able to carry two mortgages simultaneously?   After a couple of years, part of the rent will qualify in your income.   Investment properties require considerably more down payment than primary residences.  
  • August 07 2013
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