When we speak business, military veterans aren’t the first people who come to mind; it’s usually the entrepreneur archetype looking to turn their life around and pursue their goals. However, a neat little fact that usually gets swept under the rug is that returning veterans have a great shot at becoming successful post-military. And beyond the struggles they’ve come to adjust in their military days awaits a budding future in the real estate market.
Why Real Estate?
Yes, we know it may sound crazy to go from one duty only to end up on the battlefield of the real estate market, but veterans have a unique edge that makes the process of wealth creation much more straightforward and accessible. In real estate investing, leverage and financing tools are the names of the game and are often the only option for investors who can’t afford to pay in full cash. Things that are easily covered by a veteran’s VA-backed home loan.
Cost Savings
Versus the traditional mortgage and the requirements that come with it, you can save a lot more money in comparison and put that budget toward more meaningful investments. Of course, while you still need to consider your credit rating and other aspects concerned with home-buying, you won’t need to take a substantial chunk out of your savings to make a purchase.
- No Downpayments: In common practice, a real estate investor would need to make a downpayment of at least 20% of the property’s value and only finance the remaining 80%. However, you won’t need to abide by this standard and immediately mortgage 100% of the purchase price. So, instead of putting down a considerable amount from out of your pocket, you get to keep that 20% where others lose.
- Avoid Pre-Payment Penalties: Another massive benefit in cost savings is the pre-payment penalties that come with traditional lending and financing methods. Usually, you’re dealt with interest or a fee when you pay off your mortgage early, and if you exit prematurely, there are also fees and penalties to be paid. However, a military veteran doesn’t need to pay any pre-payment penalties or early exit fees, for that matter.
Plus, since these loans are government-guaranteed, you can often land more favorable and attractive terms to bump up the cost savings even more. So, for the money you’ll be saving alone, there’s a lot going for military veterans in the real estate market.
House Hacking Is Easy
House hacking is a well-tested strategy that has been proven effective by so many people, and many are still using it to date to live comfortably and still come up with a profit every month. For a brief summary, it’s when you purchase a property with multiple units, live in one of them, and rent out the rest to cover all of your expenses. And when you consider the financing options available to a military veteran, this sweetens the deal for an opportunity in the real estate market.
- Live Expense-Free: It’s difficult transitioning from military life and back into traditional living, and one of the most challenging things you’ll have to deal with are the recurring expenses that come to your doorstep every month. However, by investing in a multi-unit property and implementing a house-hacking strategy with your VA mortgage, you can get a lot of breathing room to relax and slowly adapt. So, if you consider that you’re not putting down any money out-of-pocket and manage to get tenants early, you’re looking at an expense-free lifestyle.
- Cash-Out Refinance: After a year of living in your home and watching the property value improve, you can also opt to get a cash-out refinance on your property. This will give you a new mortgage, with even better rates and a lump sum of cash you can use towards buying more investments.
Works On Multiple Homes
Last but not least, many people get the misconception that you can only use this life-changing opportunity once, but this loan is reusable and can work on multiple homes. All it takes is knowing that you’re eligible and meet all the requirements; then you’re good to go. So, not using this opportunity makes you lose a lot of potential money that you can invest in your future.
Note: Also Assumable
As a side note, a future home-buyer can also assume the Veterans Affairs mortgage on your house as long as they’re VA eligible, which means there’s more value and you can cater toward a specific niche in the housing market. So, if any of your old buddies will also be returning, you’ll be the man!
Verdict: Give Real Estate A Chance
Overall, we strongly think that there’s a future waiting for military veterans in the real estate market. And even if you don’t necessarily have the skills, all it takes is giving the opportunity a chance and finding the right people to guide and mentor you to become successful.
