How Veterans can Build Wealth through Real Estate

Real Estate…

A great way to build wealth for many, especially for veterans who receive special benefits. Read on to learn how to make the dream of financial freedom a reality.

📷 by Jason Boyd on Pexels

Smart VA loan

It’s no secret that the VA loan is an amazing benefit afforded to active-duty military and veterans, but did you know it’s also a great tool to help veteran’s build wealth?

You might be thinking, “but won’t buying a home cost me?”

Yes, you’ll pay your mortgage and taxes, but you’ll be making a huge investment in your financial future. 

Instead of looking at a home as a financial obstacle, think of it as Investing in Yourself! As you own the home, your equity builds by paying your mortgage down, and home properties in Hawaii historically go up in value. Most homeowners need to put down a substantial downpayment (about 20% of the home value), however the VA loan allows you to purchase with no money down - 100% financing. Utilizing your military benefits to purchase a home is one of the best things your can do for yourself!

Buying a million dollar home in Hawaii allows you to make you can make a substantial investment in your future at no upfront cost. You still have to pay closing costs and need to know about the VA Funding Fee. Connecting with a lender will help determine these cost as the lender might have closing cost options that help pay for a portion or all of your closing costs!

📷 by Rishabh Sagar on Unsplash

In Hawaii, there are a few unique ways that buying a home builds wealth.

The first is the real estate market itself. While most homes appreciate in value after time, this is especially true for Hawaii. The state has limited options for new development, meaning that they can’t just build new houses wherever they want — there’s only so much space! This limits supply. 

In addition, the Aloha State is popular with foreign investors, meaning that demand is high. There’s also a large military presence so there’s always an influx of potential buyers. As a veteran using a VA loan to buy a home in Hawaii, if you hold onto it, you’re likely to make a significant profit when you sell. 

If you’re active duty and buying a home in Hawaii, these benefits still apply. You might be curious what happens if you PCS — well, you can rent! There is a stipulation, you must live in the home for at least a year, but once you do, you’ll be eligible to rent your property to cover the mortgage and maybe even make a profit.

Hawaii is also special because the VA loan limit has been lifted here and currently, the interest rates are low. This means, as long as you qualify for the mortgage, you can buy your dream home in Hawaii. So, how does this help you build wealth? If you invest in a good property in a nice neighborhood with quality schools, you’ll be in a great position to sell later on. These benefits give you this possibility! 

Another opportunity active duty military and veterans have in Hawaii is the option to buy a condo or a home in a zoned short-term rental area. Tourism is one of Hawaii’s leading industries with millions of visitors traveling to the state each year. Although Covid-19 has impacted the tourism industry, once travelers return you can market your home as a short-term rental to make extra money. Similar to renting, you must occupy the residence for at least 12 months before you do this.  

📷 by Jason Boyd on Pexels

More reasons to invest smartly in real estate

In addition to all the ways you can build wealth in Hawaii, there are some general ways that buying a home with a VA loan will help you build wealth. The first is simple, and that’s tax deductions. Homeowners qualify for tax deductions that renters don’t. Yep, these incentives are available to anyone that buys a home (not just veterans and active duty military). 

The second is a bit more complicated, but we’ll explain — did you know that you can have more than one VA loan? There are some caveats of course. For the purposes of building wealth, you must have either paid off your first loan or refinanced under a different loan provider (not a VA loan). This means, you’ll be eligible to buy another property with no down payment and you can start building wealth on that home as well! 

Many active duty military families and veterans don’t take advantage of the VA loan, but it’s an important benefit that helps our men and women who serve invest towards a better financial future. If you have questions about buying a home in Hawaii or using the VA home loan - reach out!  

Looking for more on how you can build wealth through real estate? We recommend reading Buy, Rehab, Rent , Refinance, Repeat.

Still debating if you should buy? Check out our blog post “Should Military Families Rent or Buy a Home while Stationed in Hawaii”. Ready to buy your dream home and use the VA loan to do it? Here’s our 2020 Hawaii VA loan Guide.