BaH and VA Loan

[Ajkeyo]

If I'm going to be in Charleston for about 2 years of schooling will I, at any point, be able to live off base and buy a house/duplex using my VA loan? If so will I get BaH and what are the restrictions/requirements? And If not when is the soonest I can live off base and use my VA loan to purchase a house. Thank you for any responses.

[MMM]

Assuming you're single, the earliest you will be able to receive BAH is prototype, so the last 6 months of training. You are allowed to purchase a house/duplex, although the process is incredibly time consuming (and you won't have much time), and, as an E-4, you may not be able to get a loan amount large enough for a decent home, then, when you transfer, you no longer receive BAH until you make E-5, so if you can't find a good renter (and a good property manager), that mortgage is coming out of your, now reduced, paycheck. Additionally, that means when you so make E-5, you are probably not going to be able to afford living off the ship.

My suggestion, hold off on buying a home until you get to your first real duty station, and then look (especially if it has a large military presence, i.e. Norfolk).

[Ajkeyo]

Could you elaborate on what you mean when you say "[size=0px] Additionally, that means when you so make E-5, you are probably not going to be able to afford living off the ship."[/size]
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Thank you for your advice.

[MMM]

When you make E-5, you're eligible for BAH, however, you'll already have a home loan you're paying on, so it makes renting (or buying) a second home significantly more difficult, especially as a single E-5. If there are renters in the house, it's not too bad, but if they don't pay the rent or trash your home, then you're looking at several months where you have to cover both. I'm speaking about the renters not paying and trashing the place from personal experience here, and I was a married E-6/7 at the time (and a civilian making significantly more than I did in the navy).

[GLW]

..........I'm speaking about the renters not paying and trashing the place from personal experience here,..........

when I first delved into income property I was admonished to rent out properties, and never to rent out my "home",...

those were wise words,...

[spekkio]

If I'm going to be in Charleston for about 2 years of schooling will I, at any point, be able to live off base and buy a house/duplex using my VA loan? If so will I get BaH and what are the restrictions/requirements? And If not when is the soonest I can live off base and use my VA loan to purchase a house. Thank you for any responses.

Financial advice thread? Financial advice thread...

1) Avoid buying a home unless you are need 3+ bedrooms (e.g. wife, kid) and can be reasonably sure you'll be in the same location for 5+ years.
2) Don't get married or have children until after you get out of the Navy. I know she loves you and you want to get out of the barracks, but you need the financial flexibility to be out of a job for a few months or to go back to school on the GI bill, and getting hitched at 22 years old isn't the way to do that.
3) When you make E-4, get BAH and split an apartment with some buddies. The rest is tax-free income for you.
4) Pay yourself first by investing into ROTH TSP...as much as you can possibly afford, and break it up as follow: 60-70% C, 20-30% S, 5-10% I. Don't do L funds as they over-expose you to I funds and put assets into G which you don't need at your age. The Navy will automatically make you contribute 1% to traditional with no match, so you need to manually turn that off. It won't seem like much at first, but the biggest aspect you have available to you is time...investing as an 18-20 year old over a 25-30 year old will exponentially increase how much you get in retirement.
5) If you are on the blended retirement system, after two years of service put 6% of your income into traditional TSP and the other 4-14% into ROTH TSP. The Navy will match 4% onto your 6% contribution. Same asset combination as before.
6) If you need a car, purchase a used one and avoid a car loan.
7) Put the rest of your leftover income that you don't spend into a savings account. Your goal is to get $20-30k in savings to put yourself through college when you get out in 6 years.
  If, after all of that, you find yourself with money to burn, you can consider getting yourself into real estate. But honestly, it's a net negative in income flow until you've been doing it for 30 years and have paid off your mortgages.

[Already Gone]

You're not going to have the time to take care of a house while you're in the nuke pipeline.  If you're single, live on base unless you can get some roommates to split rent.
I don't believe you are eligible for a VA loan until you have been discharged, which happens when you re-enlist or get out.  DO NOT re-enlist at school unless you are already an E-5 and can max out your SRB.  Even then, it's a bad move.

[spekkio]

Active servicemembers are eligible for a VA loan. You are correct about him not having all that much time to look after a house. Hiring a property manager if he rents it out is the way he'd have to go, hence why I said his cash flow would be a net negative until the mortgage was paid off.

[Ajkeyo]

Thanks for the advice guys.

[scotoma]

Don't buy a house in your situation. It will tie you down, limit your options, and may ruin our credit rating if things don't go as planned. Since our are in the military, you are subject to their whims, so the chance of things going bad are very high. You don't want to be forced into being an absentee landlord because absentee landlords get screwed. Tenants won't pay the rent because they know that you aren't capable of chasing them down, especially if you are on deployment. By the time you get back, they'll be gone and you are out several months rent. The stress it causes ain't worth the risk. Take spekkio's advice. If you put money in a ROTH, and you need it, you can withdraw your contributions without tax or penalty consequences. Invest it in what you are comfortable, but keep some in cash.
If you are married with kids and want to park them someplace that is stable, then ignore this advice. Their wellbeing may justify the risk.