Here's the Video Transcript:
Hey guys we’re here with Eric, okay so I’m Erick too – but we’re double Eric. He just bought his place in Hawaii okay and this place that we’re in right now, 2 bedroom, 2 bath, 2 parking stalls Town House in Pearl City. Great location, got a great deal it how old are you 24, He’s 24 years old and bought a house in Hawaii and on Oahu you know it’s just that’s insane. You did the dream. So what was the process very simple actually um I got to know Erick and without him, I mean you know, I probably wouldn’t have been able to do all of this on my own. He made it easy for me. I went ahead and start off with a plan right. Yeah we met two years ago at a real estate investment group and he was like he was 22 at the time. So I was like, what’s this kid doing here but when I met him, I was like oh yes he has that fire in him.
Hen we started with your credit right? twe started getting your credit up and now your credit is pretty high right? Yeah so we started working on credit you know credit cards and making sure that everything was always on time thing you know, making payments and yeah that’s kind of where it all started. Yeah and then from there he finally got his… He finally qualified for his VA loan and then we made a plan. We were like “We’re gonna find an undervalued house” because now you know the VA doesn’t have to be a brand-new house it could be because the house anyone needs work so before I think it used to be only ready to go “turnkey houses” right? But now they change the rules so you can actually have a house they it needs remodeling. And do you remember how much you got this place for? It was listed for $333,000 so that’s what we went ahead and put in for, because definitely was a seller’s market Yeah it’s a seller’s market and that was a great price for this area and this it was our third house right or would third offer.
Yeah the first two went like that (snaps finger) and people were over bidding and these were more turnkey properties and we were like okay it’s gonna be really hard so when we saw this one we jumped on it and luckily the the seller accepted our offer and it was great and then you know we did the whole cover letter told Eric story in background and then they loved it and they loved the Eric and Erick connection.
Yeah. Now what’s the plan because you think like an investor right? So this is this is good you know for people anybody would have VA, you can use it just for your family or as an investment too, but a lot of people don’t know that. You can use it as an investment. So what’s your plan for this? So the plan was to put a little equity into this home I was going to be doing most of the work myself so I installed flooring you know the paint did the ceilings, some lighting that’s why I don’t even have any furniture in here yet because the plan was to remodel this place and you know turn it into a different type of loan later on so I can pay off my VA loan and then move on and reuse to VA loan on a different property. So if you didn’t catch that, that is the great strategy, especially if you’re single and young.
So he’s basically house hacking 2-bedroom, he’s living in one, he’s renting out the other bedroom so that helping pay the mortgage. He has the BAH also paying the mortgage, so you know he’s working both sides and now he remodeled everything pretty much he’s almost done with the whole remodeling he still has the bathroom to do. But he’s put in so much equity with the remodeling and you spent about six thousand dollars or so. $6000, on just parts and material. I can tell here right now so we got had $335K I believe he could probably resell it right now for $380K, if he wanted to and then later on it’s gonna be over 400,000 when he’s finished.
So that’s how you put a lot of equity into a home. That’s how you make money and this is just a starter home for him I mean he’s only 24 so it’s a starter home and later on he’s gonna refinance this after a year, because it takes about a year and then because it’s all that equity, he can refinance into the conventional loan or a different type of loan, he gets his full VA back and he’s gonna buy another house and do the same process. How bad was this property, this unit? It was it was pretty terrible it was old carpet, it had a nasty smell, old lighting.. There was a hole in the floor… There was a hole in the floor! The sellers agent was like, “Be careful, don’t fall through there.” Yeah so it needed work, but we saw the value of it. I mean it was a great price in this area. Pearl City goes like that I mean it’s a lot of military here a lot of people want to live here the community college is nearby the train is being built, there’s gonna be a station here.
So eventually so all that’s gonna add to the value and it’s gonna be amazing. He did such an amazing job on remodeling this place by himself. But if you don’t have that kind of time, what was gonna be your plan? Like you were gonna ask for help? I’m an electrician by trade, I’m not a carpenter, I’m not a plumber, none of that.
So I did need to ask, I was asking around the rest of the guys who work with me in civil engineering and if I needed any little tips and tricks I would just go ahead and you know show him what was going on, take pictures, video or whatever and then I’d be like “How would you go about doing this?” and that’s when they would you know give me some tips, show me some links, everything you can find on Google nowadays that, YouTube right, YouTube. You can rent tools from Home Depot, huge things that you can do. You don’t need always pay a contractor for everything and that’s where I saved a lot of money, a lot of money, I think I would have been probably $20,000 in.
Oh yeah contractors in Hawaii are expensive, yeah, so if you can do anything yourself do it and you know he’s in the Air Force, so he was going to ask his Air Force buddies to help and give them beers. I mean ask your buddies, in your Navy wherever you know they there’s a lot of people with skills and they’ll be willing to help you. Exactly yeah and that way you don’t have to pay the crazy contracting prices here in Hawaii, and save on materials. You guys have talked about using a VA loan and then switching out to conventional and then using the VA loan again.
What’s the benefit of using a VA loan to buy a property? No down payment, so you don’t have put anything down. Zero down! You didn’t have to touch your savings at all and even his closing costs were pretty cheap too for this place. How much were your closing cost for this? I think overall like $6 grand. okay yeah it wasn’t too bad. And then we also got a credit for this unit because of the condition of some of the appliances so we got that and you used that for closing as well. So there’s all these tricks that you can use and that’s why you should have a realtor that knows what they’re doing especially that knows about the VA and about investing and all that stuff the VA lets you rent out at unit after one year so anything you buy after it only has to be a primary residence for one year after that you can rent it out so he can build rental properties like that and then every time he switches he gets his full VA back can put a no down payment loan on another house.
So a lot of people who are in the military or you know, Navy, Air Force or wherever. They come here and they think of only stationed here for a short time two or three years four years even, but so they think oh it’s not a good time to buy right or it’s too expensive. What would you say to them? It’s not, it’s definitely not… Definitely, like you said. look at you know… He showed me a little history of price house market going up and down this place is always appreciating. I mean the scarcity of this place is huge. It’s an island so there’s only so much land you can have. So yeah I mean definitely if you’re not buying a place like this…
Yeah you’re pretty messing up. You’re messing up if you’re not using the VA. I would say at least. I would say if you’re here less than a year okay. That make sense, but if you’re gonna be here more than a year use your VA loan here, because this is one of the best place to get your starter home and you only need one year is then you can rent it, you can rent it out. I’m a huge numbers person so I you know I heard all this stuff before but you know I just kind of took a grain of salt and then I went ahead and did my own research and numbers don’t lie so if you look back on it you know you hopefully do what I did anybody can. This isn’t something special… He’s not special! I’m not special, anyone can do it and I feel like you’ll thank yourself. So with the VA you got to think about also your BAH right? It’s the housing allowance that’s tax free housing allowance.
I mean what do you think about that? So it’s definitely a tool to use. What I did when I got out of the barracks, dorms wherever you know wherever you’re station at.. I was staying with a friend and I was renting a little room from him. And I was just using that just temporary place so I can find this home. Have those two months that we look for right? To make sure that you have enough money coming in so that you can buy a place and I was saving it. I was giving him enough money for the room that I was sleeping in with just the the basics, nothing but a bed and like a little desk and a computer and then I saved that money. Once I had that money saved up, my credit was lined up, my money was lined up, my investments were all lined up and we went ahead and started offering for some homes. Then it was like okay now we’re on the right track because now I’m using my BAH for my own mortgage, my own asset, I wasn’t just giving it up as rental money you know once you give up the money to someone’s rent it’s over, it’s gone.
And if you’re on base you give the whole thing. Yeah if you’re living on base there are some people I know, some sergeants and stuff that are living on base and they give up their whole BAH and once once they move out they’re done they just let it you know they let that property for someone else. They give it up and so they got nothing, they leave here with nothing and at least this way you know whatever you’re putting into your mortgage you’re paying much pretty much paying yourself.
And then the cool thing is, this is tax free money right, the BAH, you pay in your mortgage, the mortgage interest you can deduct from your income tax, so I mean it’s a powerful tool that you can do here there’s so many things that you can connect to save you money basically in the long run and make you money. Right, definitely a tool, use it use it wisely. Stop wasting your BAH. So guys you see Eric, he’s 24 and he has a great place, great town house in Hawaii. You know anybody can do it, we just work together, we had a plan, that’s what you need an entry plan and the exit plan and then we worked on that together so you first find out how much it can rent for so later on you know and then how much you buy it for and can you afford the monthly payment, that’s all you need and then do the numbers they’ll tell you that always tell the truth.
Numbers always tell the truth. Thank you for watching and if you have any questions for Eric or this Erick the realtor, just send it to us you know we’ll answer Eric do you know I’ll put his contact information so you can talk to us alright. Aloha..