How To Invest in Real Estate Using the VA Loan

Why Rental Properties?

What if there was an investment that built your net worth, gave you monthly income and reduced your taxes all at the same time?

It really exists, it’s called real estate.

I’m not talking about the guys who make Youtube videos or host a $500 online course to show you how great they are at flipping houses. You’re not going to be able to do that in a repeatable manner while in a busy professional career.

What I’m talking about is finding a way to pair the incredible financial opportunities that real estate holds with military benefits such as the VA Loan. All you need to do is buy and hold properties. This will allow you to grow your wealth in addition to the saving and investing that you are currently doing. Real estate will dramatically increase the rate at which your wealth is growing.

A quick example from one of my properties that uses this strategy:

Purchase Price: $390,000 (Purchased in 2017)

Money Down: $4,000 (total out of pocket cost)

Rent: $2700

Cash Flow per month after mortgage, maintenance and management fees: $300

Current Mortgage Balance: $368,000

Current value of home (estimate): $450,000

This property has made $300 per month since 2017, paid for it’s maintenance and currently has about $80,000 in equity. It has never been vacant and has always been rented to military tenants. All of that started with $4000 out of pocket and has not cost me since. This is what real estate can do for you. If done right, you can begin to build serious wealth without having to save it all from your own income.

How Do You Do It?

You have a busy career and don’t have time to be flipping houses or buying apartment buildings. What you need is a simple strategy that builds wealth over time without taking too much time. It boils down to these steps:

  1. Find a good realtor and a house in a desirable location at your current duty station
  2. Estimate rent to see if the property will have cash flow.  Include the cost of a property manager and maintenance costs. You want to be able to support these costs with the rent you will receive.
  3. Use the VA loan or a conventional mortgage with low interest rates
  4. Live in the place while you are at the duty station- if your personal life supports it, live with roommates. This will save you a lot of money and ease you into the experience of being a landlord.
  5. Find a good property manager
  6. When you move, rent the property out and use the property manager.
  7. When able, repeat the process at your new duty station

If this seems like a common sense approach that’s the whole point. This strategy works, and does not require an insane amount of time, risk or knowledge. It will allow you to capture the wealth building properties of real estate. If you are ready to reap the benefits of home ownership, then you need to start by buying a house.   

Find a good realtor and a house in a desirable location at your current duty station

The first step is 100% common sense. If you buy a house in a location that is good for your work/life situation you will instantly have a house in a rentable area. Other military members are looking for that same location and will become future renters. Some factors to consider for location:

  • Just outside major city or downtown area
  • Easily accessible from a highway
  • Close to parks or in a nice neighborhood
  • Straddled in the middle of major work centers


The quickest, most effective method is to ask your friends/ coworkers where they live and then dedicate a day to driving to the different areas. There’s no better way to feel out a potential home than to drive around the neighborhood. Find an area you like and then move on to focus your efforts on finding a listing in that area.

A good realtor can confirm these locations are desirable and even suggest others that haven’t been suggested yet. Have a realtor lined up before you go to see any houses. There are many ways to find a good realtor but in our experience these are the quickest ways to find a quality one:

A good realtors experience will back you up on important details you may miss such as property condition or neighborhood desirability. They can also help you get the ball rolling if you see a property that you are interested in. This is a must in highly competitive markets. Real estate is a team sport. Having a good realtor and other key players such as a property manager can make home buying a simple process and help you avoid costly mistakes.

If you are interested in a more thorough explanation of this process or how to find a realtor you can find it here. Once you have a location nailed down, you need to work with your realtor to estimate the rent and see if the property will be a feasible rental.

Estimate Rent To See If The Property Will Produce Cashflow

This is not as hard as it seems. By finding a desirable location where you know other people are living you have already guaranteed your house will be able to rent.  Your realtor should be able to provide a solid estimate of what rents are in the area. If you sign up, rentometer is also a useful cross comparison. I don’t recommend relying on Zillow’s rent estimator. I have never found it to be accurate with my properties. You can also search for a realty company that specializes in rentals (or a property manager) and ask them what the renting situation is in your desired location. By cross comparing these data points you should start to get a good idea of the potential rent.


A quick back of the envelope formula for cashflow:
Rent – (mortgage + property manager + estimated maintenance cost) = Cash Flow

If you are planning on renting it to military members you need to think about what matters from their perspective. They are trying to have their housing costs at or below BAH. BAH is very decent for most areas and sometimes will allow you to get above market rent. You can look up BAH using this calculator. Just  be realistic for who your target audience is. There are a lot more O1’s- O3’s then O6 and above!

Money Gouge Tip

Renting to military members is like having insider information for a large stable tenant base. It will allow you to see opportunities where other real estate investors can’t. My first rental property was down in Pensacola where there are a ton of personnel coming and going all the time. I knew if I bought a large house in between most of the bases I would be able to rent it for above market value. This has worked out really well because 3-4 people split the house. All of them save money because it is half of their BAH individually. Meanwhile, the place goes for well above market rent and has always been occupied. You need to think about who your target audience is when you are buying a home.

Once you have estimated rent you need to estimate the other cost associated with owning a home so you can build the cashflow estimate formula:

  • Capex- industry jargon for maintenance cost. Be conservative with this estimate because it can creep up quick. If you are buying an older home systems such as the AC or roof should be thoroughly inspected before purchasing. Even if they are in good condition you should be prepared for higher maintenance cost.
  • Property Manager- if you’re lucky you may have a spouse that can successfully do this. Otherwise the hassle of fixing toilets and other responsibilities is best left to someone you pay to do it. You simply don’t have time to be dealing with issues like this. Typical rates are 10% although I’ve been able to negotiate some of my property managers to as low as 8%.

Money Gouge Tip

You want to have at least $5,000 in a bank account when you close. This bank account is dedicated to expenses related to the property and will help keep you out of trouble. This is your “zero” and any profits you make need to be dedicated to refilling it when it falls below that.

With most properties in a decent area you can expect a small cashflow once maintenance and property manager cost are factored in. A few hundred dollars per month should be considered pretty good. This is pretty typical for most real estate investors. You can make more cash flow if you buy properties in a cheaper part of town but that may not make sense. Your goal is to buy in an area that military members and their families want to live in. If you go too cheap you will likely end up in a part of town that is not safe or desirable.

Although you need to be thorough with this analysis you are basically sanity checking yourself. If you have found a home in a desirable location that and there is evidence it will rent and cover expenses then that is all you need. A lot of people will fall into analysis paralysis: the point where the uncertainty keeps them from making the decision. It’s not rocket science, if it looks like a good property and the numbers support it you should be fine.

Once you have done the preliminary analysis, it’s time to get a competitive loan that will allow you to lock in these numbers and buy the property.

Use The VA Loan Or Conventional Mortgage With a Low Interest Rate

The loan you choose will determine the performance of your rental property. You want to find a loan that doesn’t require a large down payment but will still have a low interest rate. By avoiding putting a ton of money down, it will free you up to buy more houses in the future or invest that money in the stock market.


The VA Loan will allow you to roll closing costs into the loan to close with zero money down. The drawback is that this will make the mortgage payment larger. You need to check that your mortgage payment is less than potential rent or it may make sense to put some money down.

The balance with finding a loan is that you want to avoid putting a ton of money down but still have a low enough mortgage payment to have a cash flowing rental property. One great financing option is Navy Federal’s conventional mortgage which only requires 5% down and currently has an interest rate below 2%. Financing a property with this or the VA loan will essentially guarantee that you are getting the best rates. We recommend a fixed interest 30 year (or 15 if you can swing it) to keep the cost predictable when your property becomes a rental.

Living In The Place While You Are At a Duty Station

If you have a family then you will be moving into the first home that you own. This is an incredibly exciting time of your life. You will be able to have animals and make the house yours without having to check with a landlord. If you have time on your hands you have the opportunity to do projects that will increase the value of your home.

If you are single, then you have an opportunity to make this strategy even more lucrative. Have some roommates move in with you. This will allow you to split the rent and will dramatically lower everyone’s cost of living. In the financial independence community (FI) this is called house hacking.

It is a nice way to get a feel for being a landlord and dramatically lower your expenses while you are living in the property. I personally did this at my property in Pensacola and we were each able to pay only $600 in rent while the property had positive cash flow every month.


It’s not all sunshine and rainbows. You really need to put some thought into who you want to live with. Having bad roommates is especially painful because you live with them as the landlord. House hacking can make you a lot of money but it can also create a ton of headaches you may not have time to deal with. The people you live with will determine this.

Whether you live in the place with roommates or a family you will eventually need to move out to be able to rent it. Unless you or someone close to you is interested in managing the place, you will need to find a good property manager.

Find a Good Property Manager

This is not hard at all. Plenty of people in the military own properties that have turned into rentals. They have also lived in the same places as you and faced this same problem. The first step to finding a good property manager is to ask around.

I use Brock Properties for my home in Pensacola. Talking about real estate with people at work multiple people mentioned that this was a great property management company. Once I reached out, he set up a meeting at my house to come see it and understand what I needed for management. I also gave a call to another property management company that I found online. They emailed me back and said they would love to manage my property.

Which would you go with? For me it was evident that Brock properties cared a lot more about the job then other companies. They have done an awesome job managing the property.

Word of mouth is a really good way to quickly find a property manager but first impressions matter too. If you reach out to and they demonstrate that they are professionals who take your property seriously, then you have found a great company.

Money Gouge Tip

You can change property managers at any time if you are having a poor experience. It is still worth doing the legwork to find a good one in the first place because they can cause a huge headache when a property is not managed well. If their performance decreases to the point you are not happy, you need to consider changing companies. 

An additional place to search for property managers is the BiggerPockets forum. This is a real estate investors community and is quite helpful in pointing you in the right direction.

Finding a great property manager is an important piece of the puzzle. It allows you to put the rental on autopilot while you move on with your career. This is absolutely worth the few hundred bucks a month it will cost you.

Moving Out and Moving On

At this point, the legwork for this strategy is done. You need to step back and list the place for rent letting your property manager take lead. If you are in a desirable location, renting the place should be easy. If you are able to rent to other military members than you know you will have a tenant with a stable income with a dedicated housing allowance.

Money Gouge Tip

Property managers will charge you the first month’s rent to find a new tenant and sign a lease. If you know someone that is moving into the duty station then you can pass them off to your property manager and avoid the listing fee. If your new tenant is a military member, offer to make the lease the length of their time at the duty station. This will avoid tenant turnover and listing fees.

Your attention should be focused on your living situation in your new location. If it is an expensive market or you are on a tight timeline then you may want to rent until you get more established. Another consideration is whether you can qualify for another mortgage right away. Your debt to income ratio will be a primary drive of this. I general a property with a 12 month lease should not count against your debt to income ratio. This is dependent on the individual bank and the loan type.

It may not make sense to own at every duty station but most people find buying and renting homes significantly easier after taking the leap of faith with their first property. If you find yourself in another market that meets the criteria listed above, you’ll probably be ready to repeat the process.

Building Wealth Slowly

If done right, this strategy should be a natural progression that allows you to collect houses as you move through duty stations. Even if you do not desire to be a landlord considering this strategy when buying a home will help you sell it. If you rent a property out, will find within a year or two that you are starting to build serious equity in a home while earning a little cashflow every month. The benefits will only grow with time. The best part is that once the place is rented, this growth is on autopilot. It happens regardless of how much you save or your personal finances. If you start to get a few homes rented, this progress begins to snowball relatively quickly.

You will not be seeing the gains of a 500 unit apartment building or flipping houses, but you will begin to build wealth in a sustainable way that frees up your time to focus on your life and job. This strategy is a relatively simple way to get started in real estate without much risk.

Additional Reading

If you are interested in learning more about this strategy the best book out there is: Military House Hacking. It is written by military members who have been successful with this strategy and has a lot of useful tips. For those with the ambitions to use the VA Loan on a property that will be a rental one day this is easily the most insightful book and is less than $10.

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