Hey hey, what's going on guys? Welcome to the active duty passive income podcast. This episode is going to be great. I've got none other than the VA loan Yoda here and he is going to explain to us everything about the VA loan. He’s going to demystify some of the rumors that you might have heard and he's going to give you the information you need to use it not only to buy your first home but to also turn it into an investment. Guys this is going to be a great episode stay tuned!
Hey hey, freedom fighters welcome to the active duty passive income podcast. The only place where military members veterans and their families learn how to build wealth through real estate investing. I'm your host Mike Foster and I'm here to show you how to stop wasting your benefits. Now get off your ass, step up to the firing line and make ready for today's lesson. Shooter standby!
Mike: Alright alright hey what's going on guys Mike foster in the house and I have a very very special treat for you. I am sitting here on the phone with VA loan Yoda. He is the man. You know him as Bernie Kalmus. He has been doing VA loans for over 20 years. he is a prior army veteran right and he served as a crew chief and co-pilot for Huey's and 58 while he was in and he has got an awesome message for you guys. He’s going to help us deep dive on the VA loan and we're really going to dig deep and figure out what it is, why it's important, all right and all the things that you can do with it. All right all the questions that you've been asking over the months that we've been here. We are going to answer them now, get ready. Bernie, how are you doing?
Bernie: Doing great today. How are you?
Mike: I am doing amazing and I'm really excited to be talking to you again. I know we've gotten to catch up and get to know each other a little bit over the past few months and it's exciting to have you here and introduce you to our podcast. So sorry go ahead.
Bernie: I'm actually looking forward to it. If I can help any of them that's the reason I do the job I do.
Mike: Amen amen you're a great guy and I'm really excited to introduce you. So please tell us a little bit about yourself. Give us a little background and how you eventually ended up going from the military to helping people out with VA loans.
Bernie: Well the military I got, I went back to school the selling personal of insurance and then I had a client. I was doing their group insurance for the mortgage company and I got asking him questions. He goes well I can teach you how to do this. That was over 20 years ago and I haven't sold insurance since. So I've been with NBKC bank for over 12 years and that's what I really enjoy the most is that we are very, probably our niche is VA loans and we don't charge any bank fees and it's just our way of saying thank you for your service.
Mike: Wow that is awesome! That is definitely awesome guys did you hear that? All right that is not something that's very common. That’s not common at all. So take notes as you're listening to this. You know this will definitely be a bank you want to go back to you if you're in the hunt for your next VA loan. But alright awesome so let's take it back and let's just start deep diving the VA loan. Really getting into what it's all about. So can you explain to us what is a VA loan and why is it important for the military?
Bernie: Well VA loan allows the active-duty or veteran individual to purchase a home and depending on the price to finance a hundred percent of the loan amount. The county limit to do a hundred percent in most counties across the country is now four hundred fifty-three thousand one hundred. In some counties like on the east and west coast that have higher prices well that limit is higher, Virginia and the Maryland in the DC area and in California there's some of those counties that are higher. Because of just the cost of housing and you can go above the county limit. You just have to pay 25% of the difference as the down payment between the county limit and the purchase price.
So you can still go higher, you just have to bring some money to the table. So it gives the veterans and then there's also there's no PMI or private mortgage insurance on VA loans. The VA loans do have the funding fee which is added to the loan. But it's amortized over the length of the loan either 15, 20 or 30 years. So it doesn't impact the payment as paying private mortgage insurance every month would. So if the individual is receiving disability benefits through VA, they are exempt from the funding fee. Meaning they don't have to pay. So it's a really good option to do.
Mike: It's awesome. So if you have, if you're getting disability from the military you do not have to pay the funding fee.
Bernie: That is correct. That was decided a long time ago by VA. So for individuals that do have disability benefits, a VA loan is absolutely the best way to go. Because they can do a hundred percent with no funding fee and there's no PMI on that loan.
Mike: Get out of here. That is so cool. All right so the question on that is there anything special that you have to do to I guess notify, write your bank or something with it you are receiving your disability benefits?
Bernie: Well usually when I pull up the Certificate of Eligibility, if the individual has been receiving it will say on the certificate of eligibility or COE, it'll say exempt on the form. But if they are collecting benefits from VA for a service-related disability, they will have documentation to support that. There are times that we have to update their certificate that we take care of all of that form. They just give us the forms and we send them into VA and get it all processed. So then from then on, it's in their records, they never have to bother with it again.
Mike: Oh my gosh that is so cool, that is amazing. Well alright, that is definitely something to look out for guys. If you are in the middle of transitioning out make sure that you go back and you look at your medical record and you know document all the things that are aching and breaking about your body and all that stuff. Because that will come back and help you out in the long run. Who yah man Wow.
Bernie: Well also for individuals that have done recently have done where they've closed down their loan and then they've received the letter from VA regarding their benefits, we can go back and get the funding fee removed from their loan. So well you know once they have the documentation, so we'll take care of that for them. They just send us the form and we process it from there.
Mike: So it's never really too late. That’s amazing. That is amazing guys wow.
Bernie: Especially it should take time to get it in some cases.
Mike: I bet that is, that's okay cool. So look at that man, so it's never too late. Alright if you guys are even in the process of getting your disability back, make sure that you know get that taken care of with your bank. So you can get that funding fee removed. Because that's killer, that's killer. Okay, so what about the different types of VA loans right. So we know that there are a few different types. But what kind of homes can you buy with it?
Bernie: Anywhere from a single unit to a four-unit property. The rule is that they must live on the property. So I've had clients buy a four-unit property and they have to live in one of the units and you must qualify for the entire payment when you purchase. But obviously if the other three units are rented then that's going to offset your payment and you know the same with a duplex or triplex nor in the single.
Mike: So you can buy a multi-family with your VA loan. That’s cool. So while you're living it essentially your tenants can pay off your mortgage for you, plus give you a little bit back in your pocket.
Bernie: Right. If you have a four-unit property it really makes a difference.
Mike: That's a huge difference. That’s a huge difference. What about if that property that you're finding already has tenants in them right and so you're going to move into one of the units obviously because you have to. But does the income that is provided by the other tenants, does that count against the mortgage since they've already been established?
Bernie: That depends on the length of the mortgage they have to have updated contracts for when the, with usually because the seller was once the seller is it names on the rental. So they have to update the contracts. Then we update everything in the file at that time.
Mike: Wow okay nice all right and then so are other types of homes that you can buy top. Like new constructed or?
Bernie: That's fine. I'm doing several of those right now that they're in the process of being built. Then once the property is complete. Then we do the, if the Builder carries the loan then it's just a regular purchase and then it's just a regular purchase loan. So if you have the construction loan in your name, then it's a refinance to a VA loan. We refinanced the construction loan.
Mike: All right. So okay okay cool. If you're buying that new construction right you have to buy both the land and the home right. You can't just buy the land and then buy the home later?
Bernie: Correct. The VA does not do land loans. So it's got to be, the land must have a home on it.
Mike: Okay awesome.
Bernie: And it must be in move-in condition. It can't be one that you go in and Rehab.
Mike: Nice and so I keep hearing these rumours about a new addition to the VA family right and it's a renovation loan. So are you familiar with the rules that are implied with those?
Bernie: I have not seen anything come up from our investors yet about that. So it's in the works maybe. But it's because you know home some homes do need a little help. But we haven't seen anything official yet.
Mike: Okay got it. So not official. Maybe still a rumour. But maybe something that definitely followed back on. All right cool. So that's awesome. So then how much, so we were talking about earlier the increased prices for some areas right and other areas are, you’re unable to get as much from the VA. But what's the maximum that you can receive or I guess really what does I don't know if I ask my question right here. But what depends on the amount that you receive from the VA and then what are those maximum and minimum limits that you can get?
Bernie: The maximum VA loan is 1.5 million. But especially if you're in Hawaii. But usually they will need to bring because no County in the United States goes to that amount, the individual will have to bring a down payment. the one that comes to mind that did a million dollar VA loan had a four hundred thousand down payment and he bought a 1.4 million dollar home and was able to carry a million dollar loan on the property with this VA benefit. You know the majority of counties in the US including Alaska and Hawaii, majority; well Hawaii is different altogether. But Continental 48 states the majority of them are at four hundred fifty-three thousand one hundred for the limit.
Mike: Okay and that's the limit that you can take without having to put any money down right?
Bernie: That is correct. They can do a 100% to that number and then like other counties that are higher, they can go higher on that financing.
Mike: Okay that is so cool. So alright. So then what are some of the myths that are associated with the VA loan? I know I've heard a bunch like you know the funding fee is something that you have to pay down upfront which you already establish that right. It gets tied into the loan. But then you also hear a bunch of different things about it. We also hear you know like how many times you can use the VA loan. Some people say you can only use it once. Some people could say you only have one out at the same time. Like can you demystify some of those crazy myths that I hear?
Bernie: Not a problem. You can use VA multiple times. I've had some clients do four or five VA loans. If they sell the property, they just send us the closing disclosure. We get their certificate updated so they can use it on a new home. they can also if they have a current VA loan they buy a new one and their current home sells say the day before the closing of the new one, we have up to six weeks to get an updated certificate of eligibility for the new loan, for the under new purchase. As for individuals that are not exempt and they do a hundred percent financing on the first time for regular military, not Guard or Air Guard, it is two point one five percent of the loan amount and it's just added to the loan you don't have to pay it.
With the five percent down payment, the funding fee drops to one point five percent and with the ten percent or more down payment the funding fee drops to one point two five percent and it's usually a quarter percent higher for National Guard or the reserves. But likes you can use it and if you do a hundred percent financing on the second time around, then the funding fee is three point three percent of the loan amount and that's just added to the loan. But there's no limit on the number of times that you can use a VA loan and you can also have two VA loans at the same time.
Mike: Wow tow at the same time.
Bernie: And this is going to depend on if they have one home and get transferred and they can buy a second one if they have eligibility left over. The minimum loan for the second time around is a hundred and forty-four thousand and one dollars. If it's depending on how much benefit they have left, they can go higher. They may just have to have some down payment. But it depends on how if you have, it's the funding fee coincides with these are no down five percent down or ten percent down. So the funding fee will vary. I've had several clients that have had two VA loans at the same time.
Mike: Okay so if you're going to use your VA loan for the second time. Because let's say you move from the east coast to the west coast right. You’re only allowed a limit of 144,000. That's a minimum okay.
Bernie: They can have a higher loan. It just that's the absolute lowest they can do other subsequent loans.
Mike: Oh okay got it so that's the lowest amount that your property value can beat it for you to get a loan to.
Bernie: No it's the loan amount has to be one 144,001 not counting the funding fee.
Mike: Okay okay I think I see what you're saying. Alright so got it. Oh, that's cool. That definitely helps demystify a lot of that question. Because I think a lot of people get confused and they say alright well you know if I have one VA loan, I can't use it until I sell that property. So let's say for instance if you are an investor, you're buying this with an investing mindset right and you buy one multi-family up to four units in one coast and then you buy another multi-family up to four units on the other coast. You can do that with two individual VA loans right?
Bernie: It's going to depend on, but first off you have to live in it when you buy it and you choose average timeframe you have to live in it. It’s at least a year. But if you don't sell it and then move to, it's going to depend on how much of your, it's going to be based on what the county limit is for VA loans. How much of a down payment that you'll need to have. So that's a case-by-case basis.
Mike: That's case-by-case right. So you might have to put some money down on that next purchase of yours. But at least you know you'll be able to use your VA and most of it will be afforded with the benefit. That’s cool all right and oh and I think you mentioned another myth too. So there is a myth about how long you have to live in your home right when you have a VA loan. You said it's about a year or so.
Bernie: 6 months to a year and if you want to go buy a second one, it can't be in the immediate area. Because that's obvious that you're trying to do a rental property. If you pcs to another location, then there's no time limit when you purchase you know how long you have to live there. If you get if you have a VA loan on a property and for whatever reason are unable to sell it before you pcs, obviously, you can go ahead and rent that property. Which happens to a lot. Well, it has in the past where the housing values have dropped and they couldn't afford to sell.
So that when they went to the new, you know their new posting they were able to buy another home with the balance of their benefit and depending on the loan limit and the purchase price every it's a case-by-case, they might have to have a down payment. In other cases, I've seen an individual get transferred and he has ample left in his limit and is able to finance 100% again. But at that point then the
funding fee is three point three percent. So like I said it it's a case-by-case basis like there's not just a blanket statement. But yeah can work in every circumstance. We have a program that I run everything through to make sure all the numbers add up.
Mike: Okay awesome. Okay Wow all right so that definitely is very very helpful. Because again like I said there's so much demystification that needs to happen around the VA loan and you have helped clear us up a lot. So alright you got to tell us, man, you've been doing this for twenty years, how many VA loans would you say that you've done over that time? I'm really curious.
Bernie: I'd say at least in the range of three thousand.
Mike: What? Three thousand that is crazy. It's so epic.
Bernie: It’s my wife joke. I can do VA loans in my sleep and the fun for me of doing VA loans is that I get to help my fellow veterans and to me, that’s very important to me and I take it very personally when I work with my fellow veterans and helping them get a loan for their new home.
Mike: Amen to that. I definitely can hear it you know and the knowledge and expertise that you bring to the table are very helpful. I think it's important you know for us as veterans to have someone as knowledgeable as you in this process. Because it really really helps to you know not have any questions when you're going to that closing table you know exactly what you're getting, you know exactly what you can do with it and you almost have that strategy built in with you. So that's a clutch.
Bernie: Well there are no dumb questions.
Mike: Yeah that's true. yeah, I guess right you mean after everyone has a question in their head they need answering regardless and so it's always important to know you know 100% what you're going into when you.
Bernie: Absolutely there are no surprises.
Mike: So tell us a little bit about NBKC Bank. I know you've been working with them for a while now right.
Bernie: Its twelve years, we did over 2.5 billion dollars in loans last year. Our niche is we do all types of loans FHA, VA, conventional. Our niche does tend to be VA loans and also we are very strong and supporting the different military groups in our immediate Kansas City area. We have, there's a veteran's community project to build the small homes for the veterans to live in when they're if they were on the street. It’s a small self-contained unit that they can live in for I think up to six months.
We’ve also been behind where they will go in and completely really have a home for the veteran to if you know pay disability benefits. There's a group of us that are all better than as many as I'd like, but we are very adamant about and the management is very strong on supporting the veteran community in the Kansas City metro area. We raise funds to donate to those different organizations just because we derive a lot of income from VA loans and it's only and we are very strong about the feelings about that we give back and you got to meet some really fun people.
We've had some different, trying to remember all the different I think we just support like eight of them in the area and it's nice to be able to give back to those that need it and that's the outpouring from this from our bank is very strong. Well, we've done where we packaged up over six thousand meals that could hand it out. Just all sorts of things that we do to take care of our veterans that when they need it, we try to be there for them.
Mike: Amen wow that is powerful. Bernie, I got to tell you man you've definitely found a good spot there. Again just a little bit I've gotten to know you seemed like you that meshes right with your spirit. You’re a great guy and you've been helping people out for so long. I know now it just it seems second nature. But it's really impactful and it's powerful to hear that from this end.
Because it makes the difference. now even to just the 3,000 or potentially make loans that you've done for the people like all those, it's a huge difference and then everything else that your company does man that's great, that's great. All right, Bernie, I got to take you through the bonus round all right. So this is something that I do with everyone that I've been interviewing and its three solid questions. But I want to hear your perspective on it. So tell me question number one, what is your number one read. Like what is your favourite book that you go to.
Bernie: Well my favourite one is the Bible. But for recreational reading, I do any books about military history. But primary's the Bible.
Mike: All right hey you know what I'm all about, all for that. Number one is the Bible. I'm going to tell you I've gotten some great you know scriptures readings in there and I've gone through some powerful like oh man I don't even know is just reading a certain scripture and it just messing with me and
there are some passages that I'll read there that I can read maybe 20 different times and get 20 different meanings. Okay cool. So who is your biggest hero and why?
Bernie: Well I have a fourteen-year-old son with Down syndrome. So he goes to different camps and different programs where people will volunteer their free time to help all and there will be many children in these on like a day camp where he's at right now. They give up their free time to help children like my son and other ones like and that are special needs and to me of those are heroes. because they do it selflessly and do it just because it's in their nature to be good and help others and I've met so many of them that have been involved with the Down syndrome guild for many years and they just give and don't expect anything back and to me those people are heroes. Because and most of them will say oh I just help out.
Then they don't want recognition and when I've done things like that, I don't want them either. It’s because I enjoy doing it and to help out like that. The smile from one of
those children is worth more than any money could, you could ever get.
Mike: Wow amen that is absolutely powerful Bernie. All right so number three here we go, let's finish this one out. What nuggets do you have for those who are just getting started? Right well, maybe three things or if you have one or two that's fine. But no more than three. What nuggets do you have to give to?
Bernie: Well the first one is I have had one talking to one right now that pre-approved by five different companies. You don't need that. Once you're pre-approved by one lender to a certain dollar limit, you don't need five other people to tell you yes you're good to that dollar amount. At that point
when somebody says yes you're good to go, then the only thing you need to talk to with the other companies is to find out what their interest rates are and what their bank fees are.
Because the third party fees appraisal title and such are all going to be identical and you know some people just and of course I have heard of people getting buffaloed by a fast talker. I'm so grateful that on several occasions they've called me next or talked to me next to find out that the person was telling him something if it sounded too good to be true, in their case it was. They weren't being honest with the bar and it really really upsets me when I find out a veteran has been taken advantage of as far as closing that's just wrong on many counts.
Third, prepare a list of questions. We have on our case we have we are one of Costco's preferred lenders. So if anybody is familiar with Costco, they know how thoroughly they check out anybody they work with and our approval process to two years. So make sure whoever you're working with you know check their credentials. Check out the company. Just because if they buy a new construction home, just because the Builder is saying oh here's our lender, well there's a new law; they can't steer you to their lender. Because there's a long story behind that. But don't you know, it's not always a pretty one. But don't always take it at a face value just because they're trying to and if they talk too fast, that's a red flag in itself. They try to get you to jump in and commit immediately and do everything right away without giving you a chance to do your homework and that to me is
Mike: That's a good point.
Bernie: And you can also you can trust. If you somebody recommends someone to you that means they've done business with them. So you know hopefully the person that refers you likes you and refers somebody that's going to take good care
Mike: That's some good nuggets of wisdom Bernie. Really appreciate that and for those of you who are just getting started, I hope you guys are taking notes. If you are not in the position to take notes please go back and re-listen to this episode later. Because there have been there been so many nuggets of wisdom that have been dropped on this pot guests already and but right now these three for sure you definitely want to take these. You know and you want to make sure that you are doing your homework, you are you know going back and verifying all your source.
Don’t just listen to these fast talkers. Because there are a lot of guys out there that will swindle you. I mean you hear the stories you know with your subordinates that are going out and get the car loans right with the crazy amounts of interest. That makes me so mad sometimes just hearing that. Because there are people out there that will take advantage of you just because you're military. They know that your paycheck is guaranteed and they know that they're going to get paid at the end of the day.
So definitely don't fall for those traps. Bernie, I got to say it has been an amazing pleasure to have you here on the show. Really really fortunate and thankful that you were able to take your time and you know just kind of share with us you know your experience, your knowledge and your wisdom and I really really appreciate everything that you do out there for veterans like yourself and like us. It’s impactful, it is absolutely impactful and this podcast speaks for itself. I mean you have done so many great things and you are leaving a legacy and you'd leave an Alexi behind you that will last. So please tell us how can our listeners reach out to you and get in touch.
Bernie: Well if it's stateside my direct office number is area code 9133836416. The next I've had clients call me from Germany and different areas all over the world. So usually we give a heads up, email me first let me know you're going to call. So I make sure I'm available when you call that far away and my email is [email protected]
Mike: All right, all right guys. Please, I hope you guys taking notes. reach out to Bernie he has got so much to share with you with the VA loan if you are just getting started and you have questions, reach out to him. He will answer and I believe Bernie you said there's no cost for you know just inquiries right? If you just need questions answered.
Bernie: That is correct and no cost for pre-approvals.
Mike: There you go and no costs for pre-approvals. Which is also great. So there you go. You can one-stop shop it. get your questions answered, get pre-approved and correct me if I am wrong Bernie, but NBKC lands all over the country right?-
Bernie: All 50 states.
Mike: See that look at you. So here is your one-stop shop guys. Seriously reach out to VA loan yoga. He has all of the Jedi mind tricks to help you out and help you succeed and get started if you're just getting started or to continue if you're a veteran at this too. You know oh man thank you so much again, Bernie, it has been an absolute pleasure.
Bernie: Well thank you I appreciate it.
Mike: All right all right guys that was VA loan Yoda. Wow what an interview. I'm telling you so much wisdom, it is amazing right. How much he's been able to do right. 3,000 loans, are you kidding me? That’s incredible. That’s a lot of experience that you can't buy right. So you certainly can the go back and re-listen to this thing and take down all the notes and nuggets of wisdom that he had to offer. It’s great if you have any questions reach out to him.
All right his contact information is there and you have questions about from us and our team, please reach out to us www.activedutypassiveincome.com. Hit us up on Facebook, hit us up on our Integra right. Get in touch with us we want to hear your story. If you have an awesome story about your first property, come share it with us. We’d love to get you on the podcast right and you know get your story out there, get it head right. There are plenty of people who are just starting that want to hear from you too alright. Anyway, I'm Mike foster thank you so much for listening. It’s been great, I'm out of here.