Multi Family Home and the VA Loan

 

Here are things that a VA certified appraiser will look for.

The appraiser is selected using a third party lottery system, so as to avoid nepotism.  

The appraiser does not work directly for the VA, but for a lender and has been certified, to do VA appraisals.

 

What will an appraiser (VA certified) look for at the appraisal? 

(In terms of safety and home condition.)

 

The VA will allow the purchase of up to a 4-unit Multifamily (MF), so long as the Veteran lives in one of the units. However, other VA rules make MFs hard to acquire. They need to be in move-in-ready condition. Single Family (SF) rules that carry over are included below.

 

Keep in mind, MFs, especially bank-owned MFs, are often in ‘as-is’ condition. Meaning, the seller or bank will not fix anything, so if any of the following are present, the probability of the deal working with a VA loan is negligible.

 

A home inspection for an MF can run $700-$1000+ and needs to be in move-in-ready condition. Single Family (SF) rules that carry over are included below. (SFs also need to be in move-in-ready condition.)

 

A ​Condex​ is a duplex-style ​condominium ​development consisting of only 2 units. Lower prices and no ​condo​ fees are the top benefits of a ​Condex. You also have your own yard with all its maintenance, too! Sounds very similar to owning your own single-family property, other than each unit shares a wall. The VA is usually fine with Condexes.

 

Read the remarks in the MLS listing carefully, if the words contractors, developers, investors, repairs, ‘as-is’, TLC, or there is a negotiation fee of $1000-$10,000, beware, these are tells that the property will not work with a VA loan. Also, if there are no pictures, then there is likely nothing good to take a picture of. A home inspection for an SF can run $350-$750

 

Needs to have 3-5 Years' worth of roof life left. 3-5 Years of life is in itself hard to determine. Asphalt shingle roofs can last 20- 30 years. Things to look for are ceiling stains and leaks, missing shingles, damaged or missing seals around any vents and chimneys, warped sheathing, chimneys that need re-pointing (cement) between the bricks, or missing bricks. Moss happens on roofs that are under or near tree limbs. This is not such a big deal. There are sprays that will kill the moss, and it will come off on its own. Also, make sure the bathroom fans are venting out of the attic. If the vent is in the attic, the accumulation of moisture can lead to mold in your attic.

 

The Wood Destroying Insect Inspection Report (Form NPMA-33). This report is necessary for any VA loan, on any property, MF, SF, or condos. Insects like termites, powder post beetles, carpenter ants, carpenter bees, etc, can be an issue. However, so long as the damage is minor and not structural, it is remedied by treatment, by a pest company. Usually $200-$1500, the VA will want invoices and the treatment documentation (chemicals used). If the damage is structural, then a structural engineer is needed to assess the damage and advise on the proper repairs. Many sellers and buyers will not want to deal with this due to the expense. ($300+ for the engineer, and a lot more money to repair)

 

Some SFs are older, some quite old, over 100+ years old. Building practices a century ago were not as good as those today. Often, the foundations are lacking the proper footings, beams, and supports. This leads to uneven floors & settling. Foundations in time need to be repointed; the gaps provide access to pest to enter the property. Dirt floors allow for moisture to enter the basement, and termites love wet/moist wood.

 

Check to see if flood Insurance is needed.

 

I have seen lovely Victorian properties that have what appears to be modern circuit breakers 200amp, electrical systems. However, buried inside the walls is knob and tube wiring or aluminum wiring, both pose a hazard that could cause shorts and possible electrical fires. Other potential issues are items like the Federal Pacific electrical box, they had a fire issue, and had a lawsuit over said issue.

 

Many SFs still have an abundance of cast iron plumbing. This has a service life of about 100 years; it rusts from the inside out, so by the time it starts to leak, it will need to be replaced asap.

 

Since 1978, lead paint has been banned. Lead paint can cause health issues, especially in children under six. Paint chips, and dust created from opening painted wood windowsills can be inhaled by children and adults. The mandatory form associated with lead paint is THE PROPERTY TRANSFER NOTICE. Many owners do not test for lead. It is expensive to delead, and once you test, you have to disclose the results. Whether this is right or wrong, some sellers prefer to remain willingly ignorant of the presence of lead. Lead Fafe Homes

 

There are thousands of types of mold. A small percentage can cause health effects. Mold tests cost about $600-$1000+/-. Mold can grow on wood and paper in the presence of moisture. If the bathroom vents are vented into the attic or there is a dirt floor in the basement, mold is a possibility. Inspectors are not mold experts; they will say there is, ‘an unknown substance’ or something similar.

 

Some older properties may have asbestos tiles or insulation on the pipes. While a good insulator, and harmless, if not airborne. It is harmful if airborne.

 

Many SFs are in towns and cities, with municipal water & sewer. Municipal water & sewer are ok for VA. However, if they have a well, the water needs to be tested by a 3rd party (often the home inspector) for Nitrites, Nitrates, Ecoli, & Coliform. Essentially, the runoff from fertilizers and bacteria. This carries over to MFs as well, & condos.

 

Otherwise known as a Title V inspection. New systems have what is called a Certificate of Compliance. These can be found at the town or city Board of Health (BOH). These certify the septic system is operational, safe, and in good condition. If you have a city sewer, then this is not a problem or concern.

 

Make sure they are in good condition. Look for leaks, corrosion on the pipes, and the age of the systems. Tank water heaters only have a limited life, about 10+ years.

 

If there is a basement, you can request that the inspector do a radon test. Radon is a radiological naturally occurring gas that comes up from rocks in the ground. If detected in higher concentrations, a radon mitigation system can fix it, easily enough. It is essentially a fan that transfers air, under the foundation, to outside the house $1000-$2000+/-.

 

An appraiser will do a VA appraisal report. They will look for safety items, like broken stairs, missing handrails & balusters, chipping paint, etc. Important! Make sure all the bedrooms have a window (that exits to the outside), a door, a closet, heat, and are more than about 7×7 feet. Otherwise, it will not count as a bedroom, and you will not be appraised as high.

 

The home inspector will have to include them in a pest inspection. The appraiser may include any outbuildings, as well, as well as check safety items, as mentioned before. (Closing costs. VA loans have, on average, higher closing costs, but also have a lower interest rate. Closing costs can include the inspections, buyer attorney, taxes, title work, title fees, title insurance & home insurance. Depending on credit scores, income, and debt-to-income ratio. 2% - 4% +/- of the value of the loan.)