How to Hack Your VA Loan to Build Wealth Through Real Estate

Despite the unique benefits that VA loans offer service members and veterans, around 82% of eligible veterans aren’t taking advantage of them. That’s too bad because military homebuyers have options to use their VA loans to build rental income through house hacking or leveraging equity.

So, whether you’ve been stalled by a lack of understanding, discouraged by misconceptions, or stressed out by the multi-step process of owning real estate, we’re here to address your concerns and help you build wealth by leveraging your VA loan benefits.

To set you up for success, TurboTenant and Active Duty Passive Income have partnered to bring you this extensive guide. It analyzes VA loans, debunks common myths, details clever strategies for building wealth, and walks you through the loan process from start to finish.

Let’s dive into using a VA loan for investment property.

What is a VA loan? How does it compare to other loans? 

A VA loan is a mortgage guaranteed by the US Department of Veteran Affairs that offers certain veterans, active-duty personnel, and surviving spouses extremely favorable loan terms, such as zero money down and no private mortgage insurance (PMI) requirement. VA Loans often have lower interest rates than other mortgage types as well.

Because of these benefits, a VA loan can look appealing compared to an FHA or conventional loan. FHA options typically require a down payment of at least 3.5%, and conventional loans often demand 5% down or more.

Further, FHA borrowers must pay for PMI throughout their mortgage term, and conventional borrowers are required to pay for this insurance until they reach 20% equity (at which point they can refinance into a new loan without PMI).

In terms of costs, PMI typically ranges between .5% and 1% of the annual loan amount, totaling between $1,750 and $3,500 annually for a $350,000 loan.

Additionally, VA borrowers must occupy their property as their primary residence.

Common Myths About VA Loans and Real Estate Investing

Before jumping in, let’s debunk a few common misconceptions regarding VA loans:

Myth #1: “VA Loans Are Only for First-Time Buyers.” 

Some people believe that only first-time homebuyers are eligible for VA loans, but that’s incorrect. Past homeowners and repeat buyers can utilize VA loans as long as they meet certain guidelines.

Myth #2: “You Can’t Invest in Real Estate With a VA Loan.” 

While VA loans are designed to fund primary residences, homeowners can still use them to generate indirect real estate income. For example, VA borrowers can purchase a multi-unit property (up to four units total), live in one unit, and rent the remaining units. Other common strategies include renting an ADU and cash-out refinancing equity in a VA loan to fund a new investment. Additionally, a great strategy is to purchase a primary residence with your VA loan, and when you move, you can keep that home as a rental property.

Myth #3: “You Can Only Have One VA Loan at a Time.” 

This misconception is typically valid for most VA borrowers. However, anyone receiving PCS (Permanent Change of Station) orders could be eligible to hold more than one VA loan at a time. Additionally, borrowers with remaining entitlement for their VA loan may be eligible to purchase a second home while still paying off the first one. If the loan amount exceeds their entitlement, the borrower may be able to use a VA loan with partial entitlement, with an additional down payment on the remaining balance.

Creative Strategies to Build Wealth Using Your VA Loan

Typically, when people think about VA loans, they don’t consider their potential for real estate income generation. This preconception stems from the fact that they’re primarily used to fund servicemembers’ primary residences.

With some creative thinking, you can leverage these loans to build long-term wealth. Here are some strategies:

House Hacking 

One popular method VA borrowers utilize is military house hacking (check out ADPI’s free book!). For example, if your VA-backed mortgage is $2,000 a month and you rent out the basement for $1,000, you’ve successfully enlisted a third party to pay off half your mortgage, month after month.

And, if you’re not too keen on sharing your living space, you could always purchase a multi-unit property (up to four units), live in one of the units as your primary residence, and rent out the remaining unit(s) to generate rental income.

Here’s another option: You could purchase or build an ADU in the backyard, if space permits, and rent it out to a tenant. In this scenario, you maintain the VA-funded property as your primary residence but create additional living space to generate income. But first, make sure your local zoning regulations permit you to build an ADU before committing.

Building Equity 

As you pay off your VA loan, you’ll likely generate equity (ownership in your home, minus debt) in your primary residence. For example, if you owe $250,000 on the mortgage and your property is worth $350,000, you have $100,000 in equity.

So, while equity is great, what good does it do for you concerning real estate investing? A lot, actually. We’ll explain next.

Investing in New Rental Properties 

If you’re interested in buying an additional home to generate rental income, you can access your VA-funded home’s equity and use it to help purchase a new property.

The first step is to save up for a down payment on a new loan. You could build up your savings through income, gather money from partners, liquidate stocks or other investments, or even cash-out refinance your VA loan and turn some of your equity into cash. Once you have enough for a down payment, you’re ready to purchase an additional property.

Remember, you’re only allowed to have a VA loan on your primary residence, so any future investment property loan would likely have to be a conventional mortgage. If you wish to generate rental income immediately, you’ll need to put 20% down to avoid any PMI requirements.

The second step is to use your equity as a down payment to purchase an investment property and secure a reliable tenant. In a perfect world, this tenant will pay the property’s entire monthly mortgage payment (and, hopefully, a little extra on top).

Long-Term Wealth Creation 

Real estate investing is one of the best ways to generate long-term wealth. Savvy investors can turn one rental property into dozens, generate significant recurring rental revenue, and become financially free.

Excitingly, many such investors started real estate investing by securing VA loans with zero money down and no private mortgage insurance. We’ll tell you some of their stories to give you a feel for what’s possible.

Success Stories: Veterans Who Built Wealth With VA Loans

While reading about the advantages of VA loans is nice, the proof is in the pudding. The following three veterans leveraged their VA-funded loans to accumulate significant wealth through real estate investing:

Markian Sich 

Markian Sich is a Navy veteran and Ukrainian immigrant who founded Active Duty Passive Income. He has built considerable wealth by strategically using VA loans, and his goal is to empower other servicemembers to achieve financial freedom through similar methods.

Darrell D 

Air Force veteran Darrell D served for 22 years and purchased his first home with a VA loan halfway through his career. Following a divorce, he began his real estate investment journey by renting out portions of his primary residence to help cover his mortgage. Since then, he has utilized VA loans to help build a $1.2M portfolio.

Five Steps for Buying Property with a VA Loan

If you’re ready to pursue a VA loan, we have good news: The process is relatively simple. Here’s a simple step-by-step walkthrough of how to get approved for a VA loan and build wealth through real estate investing.

Step One: Explore ADPI’s ‘Ultimate VA Home Loan Guide’ 

Before pursuing a VA loan, take 10 minutes to check out Active Duty Passive Income’s extensive VA loan guide. It’s packed with valuable information from start to finish and provides clarity on complex topics, like:

• Lender standards that borrowers must meet
• Different types of VA loans
• Refinancing a VA loan
• Choosing a lender
• The complete VA loan process

Once you’ve read through the guide, you’ll be poised to start the homebuying process.

Step Two: Check Your Eligibility for a VA Loan 

VA loans are only available to those who have actively served in the US military (or surviving spouses of those who died in the line of duty), generally within the following branches:

• Army
• Navy
• Air Force
• Marine Corps
• Coast Guard
• Space Force
• National Guard
• Reserves

In addition to serving, aspiring VA loan borrowers must also meet other eligibility standards, including minimum service requirements, honorable discharge conditions, and more.

To secure a VA loan, you first must apply for a Certificate of Eligibility (COE) from the Department of Veterans Affairs (VA). Here’s how. Your loan officer can also do this for you.

Step Three: Research Real Estate Markets 

Once the VA issues you a COE, study nearby real estate markets and focus on where you want to invest. Since your VA loan will fund your primary residence, you’ll want to purchase a home in a real estate market that you’ll actually want to live in.

To analyze investment potential, consider important factors like:

• Multi-unit properties on the market
• Typical rental rates in the area
• Property appreciation projections
• House hacking potential
• ADU rules and regulations

Considering these factors will bring you one step closer to purchasing your VA-funded home and building wealth through real estate.

Step Four: Connect With an Expert Lender Experienced With VA loans 

Before you begin searching for a property, you’ll need to meet with a lender who specializes in VA loans to begin the pre-approval process. ADPI has compiled a great list of lenders for you in their ServiceRank™ Directory. To paint a better picture of who they might be lending to, they’ll ask for important documents, such as your:

• Certificate of Eligibility proving you meet the criteria for a VA loan
• Statement of Service for active-duty servicemembers
• DD-214 for discharged veterans
• Proof of income like pay stubs, W-2s, or tax returns

Once you provide all the necessary documents, your VA lender will process the paperwork and pre-approve you for a loan if you meet their criteria. Then, they’ll issue you a pre-approval letter specifying how much money they’ll loan you.

Step Five: Connect With an Expert Real Estate Agent Experienced with VA Loans

You’ll need to connect with a real estate agent who understands the unique needs of military buyers and investors. ADPI has compiled a great list of vetted realtors in their ServiceRank™ Directory to help you find the right professional. Your real estate agent will guide you through the home-buying process, including:

• Understanding your needs, timeline, and budget
• Finding properties that fit your criteria and investment goals
• Navigating VA loan requirements and military-friendly options
• Coordinating home tours, negotiations, and offers

A knowledgeable realtor can make all the difference in securing the right property while ensuring you take advantage of every benefit available to you as a servicemember, veteran, or military family.

Step Six: Buy Your VA-Funded Investment Property 

With a clear picture of your home-buying budget, team up with a trusted realtor and start searching for a property that meets your standards. Revisit the real estate market research you conducted earlier and zero in on homes that meet your criteria.

Once you find a property you’d like to buy, make a competitive offer. If the seller accepts your offer, you’ll need to get final loan approval, appraise the home, receive a Closing Disclosure, conduct a final walkthrough, and jump through a few other hoops on closing day.

Assuming everything goes smoothly, you’ll soon become a homeowner with a beneficial loan. Your wealth-building adventure through VA-funded properties has officially begun.

The Final Word 

We hope our guide has helped you understand that VA loans are a powerful way to earn income and build your net worth through savvy real estate investing moves when properly utilized. If you haven’t leveraged your service to invest in property with a VA loan, there’s no better time than now.

Ready to make some wealth-building real estate maneuvers of your own?

Our friends at Active Duty Passive Income have your back. Use their 2025 VA loan guide to help you navigate every step of the process.