waystem93 blog

Society Hill residents clashed with members of the Civic Design Review (CDR) and architects Tuesday over plans to build a 31-story tower adjacent to the Sheraton Hotel on Dock Street.

In their opposition to the proposed apartment building, area residents deemed it “hulking,” an “eyesore,” and something that could block their view of the river.

The proposal, which went in front of the CDR for its first review Tuesday afternoon, calls for a tower at 1 Dock Street, connected to the brick Sheraton Hotel that currently sits on the spot. The new apartment tower would have 272 residential units, ranging from studios to three-bedrooms; below-ground parking for residents; and amenities on the second, third, and roof levels, including a pool and kitchen area on the roof. The facade of the building would include dark brick on the first few stories, and glass and metal for the remaining floors.

The plan was put together by developers LCOR, which has locations in NYC, DC, and Philly, along with Philly-based design firm BLT Architects.

Since news about the plan for the tower first broke last fall, it’s faced a lot of scrutiny from residents, many of whom are unhappy about the look and size of the building.

A group of Society Hill residents even appealed the project’s zoning permit, but they lost the appeal Tuesday morning, mere hours before the CDR meeting to review the project’s design.

Nonetheless, many residents showed up for the meeting on Tuesday afternoon, voicing their opposition to the project.

“It’s hulking and inelegant,” said Lorna Katz Lawson, who spoke on behalf of the Society Hill Civic Association (SHCA). She went on to say that the tower’s design made the adjacent hotel appear “diminutive.”

She called for a design with, “more refined architecture and craftsmanship.”

“If there’s to be a tower here, it should be one of the most beautiful buildings (in Philly),” she said, adding that it should be different in look from the Society Hill Towers across the street. The towers, she argued, are an icon of an earlier era of architecture.

The Society Hill Towers, which are three apartment buildings designed by I.M. Pei in 1960, have long been an iconic example of the modern movement in Philly. They became a sticking point at Tuesday’s meeting, with many residents questioning whether the new tower would complement or overshadow the beloved Society Hill Towers.

Bruce Holburg, president of the Society Hill Towers Association expressed dismay that the proposed development is 20 percent larger than the towers, and that its entrance is, “right in our front yard.”

Society Hill Towers resident James Timberlake argued that the proposed development would detract from Society Hill Towers residents’ view of the surrounding area.

“When I look out of my building on the 31st floor, that building is going to be a hand in my face,” he said.

But some of the arguments from area residents seemed to irk members of the CDR, several of whom spoke positively on the proposed development.

Leo Addimando, CDR member and head of the TK, dismissed Timberlake’s argument about the tower being a “hand in [his face]” as nothing more than a “not in my back yard” argument.

“Somewhere in my civic textbook I must have missed the chapter on how Society Hill and the towers have gained sovereignty over Philadelphia and its zoning codes,” Addimando said. “Or perhaps we’ve entered a parallel universe where property rights now have an asterisk.”

Addimando went on to call the building “very attractive” and handsome.

“The fact that it speaks to the Society Hill Towers should be viewed as a compliment and not an affront,” he said.

While Addimando was joined by other CDR members in praising the structure, several CDR members, including Addimando, raised concerns about the base level facade of the building. Several CDR members argued the dark brick that covered the first few stories did not fit with the rest of the structure.

“A building of this prominence needs to have more consideration to the first three floors,” said Daniel Garofalo, referencing the amount of brick used in the facade as well as the entrance, which he called “not as inviting as it could be.”

While questions about the design and facade of the proposed structure took center stage Tuesday, several residents also raised concerns about how the building could add to traffic congestion in the area. Their concerns prompted CDR member Ashley DiCamp to suggest a traffic study be done prior to construction.

The CDR session is only a review and suggestion meeting, meaning developers and architects will have a chance to refine their plans and present them again in the coming months.

• Developer wants to bring 31-story apartment tower to Society Hill [Curbed Philly]

Artist Raphael Mazzucco has taken a total of nearly $2 million off the asking price of his Montauk home at 53 Kettle Hole Road after it landed on the market for $4.35 million back in October of 2017.

The home first came on the market under Nest Seekers International agent Dylan Eckardt, but more recently relisted and cut its price with Douglas Elliman agents Susan Ceslow and Jan Nelson. In July, the home received its first $1.55 million price cut, putting it on the market for $2.8 million. Now, just two months later, another $200,000 has come off the listing and the 1-acre property is now asking $2.6 million.

In 2,900 square feet of living space, there are three bedrooms and three bathrooms, a stone fireplace, reclaimed barn wood walls in the kitchen and dining room, an indoor-outdoor kitchen, and open concept showers in the bathrooms. Outside, there are multiple koi ponds, a bayview rooftop deck, a pool, and a changing room next to the pool.

Mazzucco—whose photography has donned the covers of three Sports Illustrated swimsuit issues and has even appeared in an episode of Entourage as himself—purchased the home back in 2003 for $920,000 and decided to make it an ongoing art project after gutting it, originally built in 1985.

When we first featured the home, one commenter wrote that the “house itself is wonderful, and it’s worth $2M because of the location. But it will require a fortune to renovate, plus a buyer that can overlook all the mess to see the potential.” The price is getting closer and closer to that $2 million listing price, but what do our readers think that the property will finally sell for?

For tips and corrections, please email hamp[email protected]

Though home prices are generally rising nationwide, lower-value neighborhoods have a concentration of homeowners who still owe more than their homes are worth. For the past few years, researchers have been following a related trend: The foreclosure crisis, while healing, is still ongoing in many parts of the country where homeowners are predominately black or populated by other minority groups.

A number of factors could be contributing to that trend.

These days, it’s more important than ever for your property to capitalize on various digital marketing strategies, such as verifying and optimizing your business listing in Google My Business, in order to reach modern prospective residents.  

Why, you might ask?

Well, it’s estimated that one-third of renters seek out apartment listings via internet search engine.  With Google’s ever-prospering presence and our reliability on their products, there’s good reason to believe that most of those searches begin and end with Google, which averages 5.5 billion searches per day.

Google is also incredibly business-friendly and has introduced several applications that were specifically designed to help business owners boost their online presence, like the ever-evolving Google My Business (GMB). But despite the application’s user-friendly interface, GMB leaves plenty of room for human error with its constant changes and innovations. Unfortunately for you, this results in account flagging, or in worst case scenarios, deleted listings. Don’t allow all the time and effort you put into your Google My Business listing to go to waste! Nip all mistakes in the bud with our suggestions for avoiding the 7 most common mistakes on GMB.

Mistake #1: Adding SEO Keywords to Your Property’s Business Name.

You may think that adding SEO keywords to your property’s business name is a good way to cram a lot of information into a bite-sized informational field, but doing so only detracts from your business’s standing with the search engine giant. There’s no need to add unnecessary words into your name field—it’s considered keyword stuffing and could signal to Google that something is amiss with your credibility as a legitimate business listing. Keep in mind that if your business is flagged by Google for appearing fraudulent in any way, it can result in lasting damage to your online reputation.

Depending on how misleading your listing is, you may be slapped with either a “soft” or “hard” suspension. A soft suspension will bar you from managing your listing but will not remove it from Google’s search results. It’s similar to falling out of Google verification, and it typically requires re-verifying the listing by receiving a call to your business phone number or a postcard to your business address with a numbered verification code.

For the unlucky few hit with a hard suspension, you can expect complete removal of your business listing from search results, maps, and all other Google applications. In order to get your listing up and running again, you’ll have to contact Google directly with a solid argument as to why your listing should be reinstated. It’s not impossible to do, but you’ll need to be prepared with plenty of evidence that supports the legitimacy of your business such as photos of your address placard or lobby.

Again, it’s important to keep your business name clear, concise, and consistent across all social channels including GMB.

Mistake #2: Claiming a Location That Is Not Yet Open for Business.

We totally get it! You have a new community still under construction that you just cannot wait to promote online. Not to mention, you’ve heard from many renowned digital marketing professionals that you need to establish your digital footprint as soon as possible—sometimes when the thought of a new business is even just a mere twinkle in your eye.

However, don’t put the cart before the horse. Your brick-and-mortar business needs to have a valid mailing address or telephone number in order to verify your business listing in Google. And, if you’re still hanging drywall, you might not be there just yet. Keep in mind that you only have a certain number of attempts to verify your phone number or address with Google, so don’t take this step of the process lightly! It’s one of the most vital and could significantly have an impact on the traffic driven to your marketing website.

If you take away any piece of information from this blog, it should be this: The point of Google verification is to establish yourself as a legitimate business. So, if you have to wait for that to happen, then in the words of Ralph Waldo Emerson, “Adopt the pace of nature: her secret is patience.”

Mistake #3: Adding Incorrect Information Regarding Your Apartment Community.

If your business is experiencing failing search results despite your newfound efforts in the digital marketing realm, check the website URL and phone number found on your Google My Business listing. Odds are, it is outdated, incorrect, or missing key information altogether. Keep in mind that all information regarding your property must be consistent across all of your digital channels. It’s called NAPW—name, address, phone number, website—consistency.

For example, if the website address is pointing to a URL that does not belong to your company, your business will not only miss out on valuable, lead-generating traffic, but it will also be at the mercy of Google. Google penalizes businesses with incorrect listing information. In other words, if a website address on your listing leads to anything other than a full-fledged marketing website or a relevant landing page, Google will not be a happy camper.

When it comes to phone numbers, the number you include on your Google My Business listing must reach someone within your company once dialed. Businesses who list tracking or call center numbers are setting themselves up for disappointing results. While tracking numbers can provide fantastic insight into your call-driven traffic, it’s important to Google (and potential residents!) that your number appears local. For example, Manhattan properties should always have 212 area codes in their numbers as opposed to something electronically generated like 866 or, worse, 1-800.

But, don’t forget that NAPW consistency also includes close monitoring of your property name and address, which will also solidify your brand in the eyes of your prospects, current residents, and of course, Google.

Mistake #4: Failing to Upload Photos of Your Property.

Photographs are one of the many assets you can use to showcase your community, but many property management companies seem to take them for granted. Not only should you step away from the smartphone when it comes to photographing your community, but you should also seriously consider investing in professional shots of your apartment home model as well as the property at-large, including all of its five-star amenities. Your apartment is essentially a product that you’re trying to sell, so what better way to appeal to prospective renters across the web than highlighting it in its most flattering light?

Research shows that posts including images produce 650 percent higher engagement than text-only posts. This is because visual content is growing increasingly popular on social media. Coupled with our 8-second attention spans, visual content remains memorable and effective in the eyes of the consumer, allowing us to process, understand, and retain information quickly and efficiently. And in the immortal words of business owners everywhere, “The customer knows best.” So, appeal to yours with beautifully composed photos of your property.

Mistake #5: Obtaining an Insufficient Number of Online Reviews for Your Property.

Consider the last time you purchased anything of significance online—or, really anything at all. You most likely conducted extensive research on the product itself and read a number of reviews from other buyers on multiple websites. You may have even crowdsourced opinions via social media. This is modern consumerism, plain and simple. You not only want to learn about the product, but you also want to explore the product’s usability, quality, and value from other purchasers.  

In the same vein, every day, millions of people search the web for businesses who can help them achieve a specific goal. These clients research companies for services offered and satisfaction rates. And while Google doesn’t necessarily penalize businesses who lack reviews, the companies that do won’t be rewarded with more prospective business, either.

Many business owners realize the importance of reviews, but feel uncomfortable asking for them—they rather allow them to occur organically. But, they don’t always, and sometimes, if they do, it’s not the type of review you’re seeking. If this applies to you, try reaching out to a few trusted residents, former renters, or employees who are familiar with your property. Let them know how important their opinion is and encourage them to share their personal experiences with your community on your social media channels. Even if you start small with just one or two reviews, it is certainly a step up from no reviews at all.

Also, when it comes to reviews, don’t forget to check them regularly. Address any problematic reviews head-on, but don’t forget to respond to favorable ones as well. It’s important to put this tactic into practice consistently, so you can continue to encourage current and former residents to submit those five stars while actively monitoring any potentially damaging reviews that might (and most likely, will) pop up at some point.

Mistake #6: Hosting Duplicate Listings of Your Apartment Community.

This mistake is all too common in our industry and could carry with it many heavy consequences. First things first: a business with multiple listings on Google simply looks disorganized, careless, and unappealing to potential renters. If you cannot even manage your online presence, how could you possibly handle the chaos that is property management?

Secondly, it confuses potential leads, especially if each listing contains differing information. Internet listings exist for this very reason—to drive leads to your business phone, marketing website, or the front door of your leasing center. Potential renters won’t waste time calling several different numbers to determine the correct one. Instead, they will simply move on to the next potential place of residence on their list—and without a second thought.

Finally – and perhaps, most importantly – Google doesn’t like duplicate listings. Not only do multiple listings violate Google’s terms of service, but they also clog up search results with what looks like inaccurate information. Consequently, Google will remove these duplicate listings with haste, so make sure your actual listing doesn’t get eliminated on Google My Business due to a negligent duplicate listing.

We understand that with high turnover and the frequent sale of properties from one property management company to another, social media passwords and access to various online accounts can get lost in the shuffle, but it is vital to request access to all new property listings as soon as you are able. This way, you can quickly start the process of reclaiming and reverifying your GMB listing if your request is not responded to within seven days.

Mistake #7: Using Incorrect Categorization on Your GMB Listing.

Google’s “Category” field maintains a very important search tool for users, which means it’s crucial for you to make use of them on your business listing. Many businesses make the mistake of choosing too many categories or categories that do not accurately explain what the company does. Again, Google views this as inaccurate, or “bad” information for your end user. It’s not unusual for Google to pick up on your usage of the incorrect categories, or an excess of them, then flag your account for misinformation.

If your listing’s categories are deemed as such, it can even affect properties that have already verified their address or phone number through the GMB verification process.

Instead of juggling several categories, pick one or two that most accurately describes your business. You may need to spend some time narrowing down your options (there are over 2,000 categories to choose from), but once you’ve confidently nailed down your category, you’ll be one step closer to effectively reaching your target audience and locking down your leads. Pro tip: For apartment communities, “Apartment Complex” and “Apartment Building” are your best bets.

Google My Business is a fantastic tool for business owners, who’d like to better manage their online presence. However, there are certain rules that must be followed in order to succeed and improve your apartment community’s online impressions. Give your GMB listing some much needed TLC and your property will surely reap the rewards that only a fully-optimized and verified Google My Business listing can supply.

As you were browsing, something about your browser made us think you were a bot. There are a few reasons why this might happen:

• You're a power user moving through this website with super-human speed
• You've disabled JavaScript in your web browser
• A third-party browser plugin, such as Ghostery or NoScript, is preventing JavaScript from running. Additional information is available in this support article.

After completing the CAPTCHA below, you will immediately regain access to the site.

The University of Massachusetts-Boston plans to select a developer for its 20-acre Bayside Expo Center site just east of the JFK/UMass stop on the busy, busy Red Line in Dorchester.

Recall that the site was at different points supposed to host a soccer stadium for the New England Revolution and the athletes village for the 2024 Summer Olympics. Both of those plans came and went, of course—hence the sale now.

That sale is expected to produce a project that UMass officials described recently to the Globe’s Tim Logan as “something like a mini Kendall Square—a bustling business district that will bring big-name companies to the university’s doorstep while pumping much-needed cash into its coffers.”

Though their names are unknown, the short list of finalists is said to include notable local developers as well as national firms specializing in life sciences and technology campuses.

Whatever happens, a development is expected to be a major windfall for UMass-Boston, generating hundreds of millions of dollars for the school. Stay tuned.

Welcome to the Rich on Money Complete Guide to VA Loan Investing!

There are many things you can do with the VA loan benefit.

But can you invest with it?

Kind of, sort of.

The VA doesn’t say you can, but if you understand the rules, and buy properties as you move from assignment to assignment in the military, it is possible.

You can’t just buy a home and make it a rental property without living in it first.  There is an occupancy rule I’ll be discussing.

You can, however, buy a house at your current assignment using your VA benefit, live in it for a short period of time, turn it into a rental property when you leave, and buy a house at your next assignment with a VA loan repeating the entire process.

Another possibility for investing is buying a 2, 3, or 4-plex using your VA benefit and living in one of the units  for a short period of time.  When you move on to your next assignment, you’ll be able to turn the entire property into an investment legally.

Let’s start digging into the details!

The first thing we need to understand is the occupancy rule.

Occupancy Rule

To get a VA loan, you must intend to occupy the property as a personal residence.  Most VA lenders (the VA itself doesn’t do the lending) want you to move into the property within 60 days after closing, but exceptions to this rule can be worked out with lenders on a case-by-case basis.

In some instances, a spouse can move into the property for you, but the lender will still want to make sure you can afford to maintain both residences before letting you qualify.  In some cases, it may be possible for a dependent child to move in, but this is rare.

Multi-family

The VA loan allows you to purchase single family, duplexes, tri-plexes, and four-plexes.  You still have to intend on living in one of the units, but are allowed to rent the others out.

Qualifying for the Multi-family VA loan

Each lender will approach the qualifications differently, but here is an example from Veterans United, a large lender.  They won’t consider potential future rental income as income towards qualifying for a mortgage unless you have at least a two-year track record as a landlord or having used a property management company. You need the renters in a lease before closing as well.

If you qualify and want to count future rental income, they also want six months of full mortgage payments as cash reserves in the bank.  Other lenders will probably require something similar.

Single Family Investing

While the VA loan program was not meant to be used for investment properties, it can be used for that purpose as long as you have an understanding of all the rules.

To invest in single family homes with the VA loan program, you must intend to live in the house as your primary residence when you purchase it, and live in it for at least a year before turning it into a rental.  That one-year timeline is not set in stone and not mandated by the VA.  It can be flexible depending on the circumstances that cause you to move.   Check with your lender.

The point to remember here is, you are buying a house to live in for a few years, but should be more concerned about how it will perform as a long-term buy-and-hold rental when you purchase it.  You know when you move away in a few years it will become an investment property.

Multi-family Investing

It’s easy to invest right off the bat when you buy a 2, 3, or 4-unit property with a VA loan because you can rent out the additional units immediately.  In fact, the lender will likely require they are rented out before closing.  The same rule as single family homes still apply, you need to intend to live in one of the units and stay at least a year, or whatever the requirement for your lender is.

Once you move on to your next assignment, you are legally able to rent out the entire multi-family property as an investment.  This is an extremely useful benefit because you are able to buy a multi-family property with no or a small down payment.

Try that without the help of the VA!

Most people can’t afford the down payment on a 4-unit property.

I should point out one of the benefits of purchasing a multi-unit with a mortgage.  It’s called househacking.

Househacking is when you either rent out rooms in your house or units in your building to help cover your rent or mortgage.

In this case, if you have a four-plex, and rented out three of the units, it is possible to cover most or all of the mortgage payment with just the rent from those three.

That means you would be living in your unit for free, or almost free!

There are other expenses to consider on top of the mortgage, but this can be huge!

Intermittent Occupancy

This is a somewhat rare exception to the VA occupancy rule.  This rule allows buyers to move forward with a VA loan even if they can’t maintain a physical presence at the home on a daily basis.  This often applies to Veterans working overseas as civilian contractors, but every buyer’s situation is different and you can always attempt to discuss this with your lender.

The lender will want to establish that the veteran has a history of continuous residence in the community he wants to buy in.  They’ll also be checking to see if it looks like a primary residence has already been established somewhere else.

Fees

Everybody loves to point out there is no private mortgage insurance (PMI) on a VA loan when you have less than 20% down.  This is because the VA guarantees 25% of the loan up to a limit for a lender.  This makes it possible to purchase houses with no money down without paying PMI.  This guarantee also allows interest rates to be slightly lower than similar non-VA loans.

This is an investors dream!

But nothing is free in this world.

The VA balances this out by charging a funding fee for the loan.

This fee will be a percentage of the entire loan, and can be paid in cash or rolled into the loan price.

The amount of the fee will depend on the type of Veteran you are, down payment amount, and whether it is your first or a subsequent time using the VA loan.

Ability to Waive Funding Fee

Certain people are able to waive the funding fee.  This is a HUGE benefit.  If you fall in this category, the VA loan is a no-brainer for you.  It will be an excellent value compared to other options.

You do not have to pay the fee if you are a:

• Veteran receiving VA compensation for a service-connected disability, OR
• Veteran who would be entitled to receive compensation for a service-connected disability if you did not receive retirement or active duty pay, OR
• Surviving spouse of a Veteran who died in service or from a service-connected disability

If the lender is able to verify from the VA, usually through the certificate of eligibility (COE), that you are exempt, you will not have to pay this fee at closing.  If there is any doubt or your disability claim is still pending, you will need to pay.  You can file for a refund when your claim is approved and you have all the appropriate documentation.

How to Get a VA Funding Fee Refund

Your Certificate of Eligibility (COE) will state whether or not you’re exempt from paying the fee.  There will be cases, however, where there is a pending disability claim when the loan closes.

If your pending claim is later approved with a retroactive date before the close of the loan, you will be eligible for the VA funding fee refund.  You may also be eligible for the refund if you have no claim pending at closing, but later have a disability claim approved that is retroactive to a date before loan closing.

This could spans years.  It is even possible to request a refund after a loan has been entirely repaid.

Since this fee is paid to the VA, they determine refund eligibility.  You can start the process one of two ways:

1. Through your original lender
2. Through your VA Regional Loan Center

You are usually reimbursed depending on how you paid the fee.  If you paid in cash, you will be reimbursed in cash.  If you rolled it into the loan, your loan amount will be reduced by that amount.

I have two great links given to me courtesy of Doug Nordman at the-military-guide.com.

The first one is the VA handbook itself.  Tons of info if you really want to get into the weeds:

https://www.benefits.va.gov/warms/topic-homeloans.asp

The second link is the specific chapter inside the handbook that explain to VA employees how to process VA funding fee refund requests:

https://www.benefits.va.gov/WARMS/docs/admin26/m26_01/M261_Chapter%203%20-%20Fees%20and%20Charges%20Paid%20by%20the%20Borrower%20FINAL.docx

Feel free to comment at the bottom of this post if you have questions about this.

Other Fees

• The lender, not the VA, sets the interest rate, points, and closing costs. You can shop around for better rates.  Some may have lower fees or negotiate certain credits
• The cheapest lender may not always be the best. The ability to close quickly and efficiently is important, and can be worth extra money for a more competent company.  Try to get references and referrals
• The seller can pay for some closing costs up to 4%
• No commissions, brokerage fees, or “buyer broker” fees may be charged to the Veteran buyer

Eligibility

You need satisfactory credit, sufficient income, and a valid certificate of eligibility from the VA to get the loan.

The VA does not require a borrower to have a specific minimum credit score for VA loans, but many lenders will require applicants to have a credit score of at least 620. If a borrower does not meet this requirement, they may still be approved, but higher interest rates may be charged.

When applying for a VA loan, be prepared to provide copies of W2 statements and previous pay stubs to verify income as well as documentation of assets such as checking accounts, savings accounts, and other financial investments.

VA home loans can be used to:

• Buy a home, a condominium unit in a VA-approved project
• Build a home
• Simultaneously purchase and improve a home
• Improve a home by installing energy-related features or making energy efficient improvements
• Buy a manufactured home and/or lot
• Refinance an existing VA-guaranteed or direct loan for the purpose of a lower interest rate
• Refinance an existing mortgage loan or other indebtedness secured by a lien of record on a residence owned and occupied by the veteran as a home

There are a bunch of different ways to be eligible for this loan:

• 90 days in a combat zone
• 1 year of active duty
• 6 years of drilling as a reservist or national guard

Here is the link for eligibility rules:

https://www.benefits.va.gov/homeloans/purchaseco_eligibility.asp

Loan Limits

The VA does not have a cap on how much you can borrow, but they do limit how much of the loan they will guarantee.  At this amount or below, you are able to have no or a low down payment.  Once you go beyond this loan limit, the remaining portion will require a larger down payment, usually about 20% of the portion over the loan limit.

The typical loan limits for no money down are as follows:

$453,100 for one property

$580,150 for a two-plex

$701,250 for a 3-plex

$871,450 for a 4-plex

These are the amounts for most locations in the U.S., but you should look up your location on the VA website.  Some locations have limits quite a bit higher, such as Alaska, Hawaii, Guam, and the U.S. Virgin Islands.

You can check these limits here:

https://www.fhfa.gov/DataTools/Downloads/Pages/Conforming-Loan-Limits.aspx

Remaining Entitlement

You can have more than one VA loan at a time up to the loan limit above.  The loan limit applies to the location you are now, not the location you bought before.

An example would be: you bought a property in Columbus, Ohio for $200,000 and now you live in Montgomery, Alabama.  The loan limit for Montgomery is $453,100, so you still have $253,100 of remaining benefit you can use.

Remember!  On your second or subsequent properties, the funding fee is quite a bit higher.  It can be reduced drastically by putting 5% down.  This might be a good idea!

You can buy a second, or even a third house with this remaining benefit.  Occupancy rules still apply.

An entitlement can also be restored by paying off the VA loan and disposing of the property (that usually means selling it).  If you pay off the loan and keep the property, you can restore the entitlement one time in your life. This will free up the VA loan entitlement to be used again, subject to occupancy rules.

A VA loan is assumable.  This means another party qualified for VA loans can assume your loan.  If somebody assumes the loan, your entitlement is restored.

The VA Appraisal

Once you have an accepted offer on the property, it will need to undergo a VA appraisal.  This is part of the loan qualifying process where they check the fair market value and, more importantly, see if the home is safe, sound, and sanitary according to VA standards.

Safe – The below chart was created by Veterans First Mortgage to give an idea of some of the things the appraisal will look at to determine the property is safe:

Sound – This applies to the structure and functionality of windows, doors, and appliances.  They care about foundations, even on manufactured homes, and will pay attention to water leaks and make sure the source of the damage is addressed.

Sanitary – This leaves a lot subject to interpretation, but the home cannot be a health hazard.  Think sewer, septic, water, wells, etc.

How Will This Affect My Investment

In case you haven’t noticed, the appraisal that happens on a VA loan is different than one on a conventional loan.  The safe, sound, and sanitary guideline is approached differently by each VA-approved appraiser.  This has caused problems for some buyers and sellers.  This will affect your investment strategy.

For one, you may consider avoiding properties that need significant work.  Fixer-uppers and distressed properties can be tricky.  In most cases, identified issues have to be fixed before closing.  This is unfortunate, as the sound investment practice of buying distressed property and fixing it up yourself does not work well with VA loans.

Caveat:  There is a specific way to purchase a property with a VA loan with the express purpose of improving the property.  I hear it’s difficult and requires a significant amount of paperwork and navigation of bureaucracy.  Proceed at your own risk!

Additionally, there have been some complaints, both from buyers and sellers, that certain VA appraisers come up with unreasonable findings or low estimates.  While sometimes these are successfully challenged, on certain occasions deals are lost.  This is upsetting to both the buyer and seller.

A prominent blogger and good friend of mine had this very problem.  I’m trying to keep his identity a secret, but he’s a surfer, and his first name is Doug. (I know, too vague)

He challenged unreasonable findings by his VA appraiser, and was unsuccessful in having anything done about it.  He was forced to use a different funding source that cost him a lot more money.

To be fair, many people’s VA loans go through without a problem, but the appraisal process is more stringent than what a traditional loan requires.

Also, keep in mind, this appraisal is not for you.  It is not to protect your interest in this property.  It’s for the lender and the VA.

I recommend you do a separate home inspection at your expense to identify all issues with the property you might not be aware of.  I do this on all my properties.  This person is paid by you and is looking out for your interests.  That matters.

You should tell them what types of things concern you the most.  I’m always most concerned about hidden water damage, foundation issues, and add-on rooms that were done poorly.

Should You Invest with a VA Loan?

It’s nice to know you can invest with a VA loan.  That doesn’t necessarily mean you should.

Let’s look at some of the important factors to consider.

On a VA loan, everyone gets so excited because you can buy a property, maybe even a four-plex, with NO MONEY DOWN!

I know a lot of real estate investors that consider this the greatest thing in the world.  They would say you are crazy if you don’t use your VA benefit to it’s max to get as much property as you can with no money down.

But just like alcohol, chocolate, and Game of Thrones, I believe all things should be done in moderation.  Consider not being too highly leveraged with no equity.

The risk you run is buying a property with no money down and then having the price of your property and rents drop during the time you own it.

When you move away, you may find that you have trouble renting it out because of a depressed market in your area, and you can’t sell because you have no equity and owe way more than the house is worth.

If you can’t rent it out to cover your mortgage, and you can’t sell, you are forced to dump money into this property every month until you figure out how to fix your problem.  The property is no longer an investment, it’s a liability.

Of course, the opposite could happen.  Your no money down property could skyrocket in value, and you come out the hero.  That would be great, but there are no guarantees.  You need to gauge your risk tolerance and decide to what level you want to take advantage of no money down.

If you are going to make a 20% down payment, it may not make sense to use your VA benefit.  Using mortgage calculators, compare the interest rates of the VA loan vs. other types of loans.  Be sure to factor in the funding fee.

You should be able to figure out which loan will be better for you.  It may end up being VA, but not necessarily.  Also, you may want to save your VA benefit for an opportunity in the future where you want to buy a house with no money down.

A common investment strategy is buying distressed homes at deep discounts and then doing the work of getting them ready to either rent out or flip.  I’ve done this.  Based on what we know with the VA appraisers, this strategy won’t work well with VA loans.

It’s Not as Simple as Just Buying Homes

You’ve decided the VA loan is for you.

Great.

So you buy a home at every assignment, and turn it into a rental when you move away.

And retire rich.

Right?

Nope.

This is a common mistake that military members and Vets make.  They buy houses that won’t make good rentals.  They don’t look at the numbers before they buy.  It is a fallacy that you should buy a house at every duty station and then rent it out when you leave.

This will not work.

You have to buy the right house in the right locations.  Not every duty station will have houses than can be bought for prices that will make them good rentals.

You need to understand real estate investing and run the numbers before you purchase.  The rental should be able to make a return on investment (ROI) that is higher than what the stock market or other passive investments would offer.

To understand more about this, read my post on Real Estate Mistakes Military Members Should Avoid

That is my complete summary of using the VA loan for investing.

Here’s a link to a summary of VA Home Loan Benefits

https://www.benefits.va.gov/BENEFITS/benefits-summary/SummaryofVAHomeLoanGuarantyBenefits.pdf

Good Luck.

I want to hear about your experiences or questions with VA loans.

Comment below.

Rich on Money

Related

Construction of the skinniest infill building in Downtown Denver is complete. SugarSquare, the 25-foot wide four-story office project near 16th and Wazee Street, still has interior tenant improvements in progress but the exterior of the glass-and-steel structure is finished and looking great.

Designed by Semple Brown and developed by Urban Villages, SugarSquare adds a little more than 10,000 square feet of office space to its parent, the historic Sugar Building. Across the alley is SugarSquare’s older sibling from 2008, SugarCube.

Let’s take a final look at SugarSquare:

One reason bus trips take as long as they do, according to Metro, is that boarding—people swiping their fare cards or paying in cash—can account for “up to 25 percent” of the travel time along a route. That’s in part why Metro has been piloting a cash-free service model on an express route that runs from Maryland to downtown D.C. on Georgia Avenue since June.

The idea is to reduce additional travel time for riders by requiring the use of SmarTrip cards. Systemwide, cash payments on Metrobus take up roughly a quarter of the total amount of time that buses idle while passengers get on or off, the Washington Post has reported, even though only about one in ten Metrobus trips involve cash. Loading SmarTrip cards via cash on Metro buses can especially extend how long it takes for a given bus to complete a route.

Now, Metro is asking customers whether it should expand cash-free bus service beyond the 79 express route in the pilot program to several other express routes. In a release last week, the transit authority said it is “considering” cashless service on the following routes: 16Y, 37, 39, 59, A9, G9, J4, K9, S9, X9, REX, and Metroway—as well as future new limited-stop routes.

Riders who prefer to or have to use cash would still have the option of doing so on local bus routes, per Metro. “All of these routes are also served by local bus routes, all of which would continue to accept cash,” the release points out. Metro is accepting public feedback on the concept until Sept. 24, online or at a public hearing at its headquarters on Sept. 17 at 7 p.m.

Metro’s board would then review and approve the comments in November. Metro says that before eliminating cash fares from any bus routes, it would also “conduct additional public outreach and a Title VI analysis,” one used to test for discrimination and required by federal regulators. The cash-free program on the 79 express route will continue through December.