VA Loan Assumptions for Real Estate Investors: Huge Cash Flow Advantages

Craig O’Boyle (00:00)

I can give you a quick example. You take a $400,000 loan at 7 % versus a $400,000 loan assumed at say 2.75%. The savings is over $1,000 per month.

You also take over the term.

the savings over 20, let’s say it’s three years old, 27 years

You’ll save more than $402,000 over the remaining 27 years by doing an assumption. So the benefits are huge,

investors that are scooping these up and they’re much better able to cash flow ⁓ because of what they’ve done

Michelle Kesil (02:11)

Hey everyone, welcome to the Investor Fuel podcast. I’m your host, Michelle Kesil. And today I’m joined by someone I’ve been looking forward to chatting with, Craig O’Boyle, who’s been making serious moves in the FA and VHA loan space. So excited to have you joining us on the show today, Craig. I think the listeners are really going to take something away from how you’re approaching helping people who want.

support with their mortgages and getting those loans. So yeah, thank you for being here. Awesome. So yeah, let’s dive in. First off, for those who may not be familiar with you and your world, can you give a short version of what your main focus is?

Craig O’Boyle (02:46)

Yes, no problem. I’m glad to be here.

Sure, so I started a company called Assumption Solutions in 2022. And that’s when rates basically shifted from the lowest rates we’ve ever seen to the highest rates we’ve seen in 20 plus years. And…

We created a company that was designed initially to help just the regular home buyer and home seller who had an FHA or VA loan figure out how to navigate the world of mortgage assumptions. And when we started, it was a little,

It was a little unclear whether or not investors specifically could get involved in this world. As we’ve gone on through the last three years, it’s become clear that there is a big opportunity for investors in the VA assumption world, not so much in the FHA world. And at this point, ⁓ now we’re one of the leaders in this space that we kind of invented in 2022. And we see quite a few investors who are looking to

assume a VA mortgage, go through our company and get help through that process.

Michelle Kesil (04:21)

and what markets are you operating in or are you nationwide?

Craig O’Boyle (04:27)

We’re nationwide. We’re based in Colorado Springs, Colorado. My background is I’m actually, I’ve been in real estate since I was a 19 year old kid in 1995. I got licensed.

And I spent in Colorado Springs helping people buy and sell homes. I spent a lot of time at closing tables where the assumable nature of a VA loan would come up because we have quite a bit of military presence here with the Air Force Academy and Fort Carson, NORAD, Peterson Air Force Base, all kinds of things like that. so

I always told people if they ever found themselves in rising rate climate as a seller, they’d have a special asset. so

We’re nationwide, but we started here in Colorado Springs and we spent a lot of time training in Colorado Springs to all the agents in various companies around the city. And we’ve probably made Colorado Springs one of the most robust markets in the nation for assumptions. But that said, anywhere in the nation has a percentage of loans that are VA and FHA. And we’re seeing quite a few investors in various markets that are especially jumping on the VA loans.

Michelle Kesil (06:22)

Yeah, love that. So maybe for people who are just starting out on their investing journey and they aren’t necessarily familiar with how these loans can be of use or supportive for them, can you give a little bit of background on, yeah, kind of their purpose and how people can understand more of how they can be beneficial to their investing process?

Craig O’Boyle (06:47)

Absolutely. So an FHA or a VA loan is basically a government backed guaranteed loan, VA specific to veterans, right? When they’re getting them. FHA has no ⁓ veteran piece. But when those loans were taken out, especially prior to, let’s say, March of 2022, they generally carried ⁓ an interest rate below three and a half percent.

Right. After March of 22, we started rising rapidly and got as high as, you know, seven and a half percent or maybe even close to eight in some places. So if you’re an investor, obviously you’re looking at a property in most cases for as a rent on the rent side for cash flow. And if your cost of financing or debt is too high, it can make it a challenge.

if not impossible, to get any sort of cash flow. Now, of course, the other side of investing is there are people who just purely invest for appreciation, but that’s usually a lot shorter term investment. And so the people looking for cash flow are generally going to have to decide, you know, do I put up with a high rate when I buy the property I want or

Do I have to put down so much cash that it makes it then cash flow positive? Well, when you look for a property that’s assumable, ⁓

you kind of instantly get sometimes the best of both worlds. Doesn’t mean you don’t have to have cash involved, but it’s the cash involved to buy or an assume an existing loan. It’s not like your typical, got to have at least 20 % down. It may be 20%, but it’s really set between what is the loan balance in place on that property currently and what is the price of the home. That is your down payment. And so,

I can give you a quick example. You take a $400,000 loan at 7 % versus a $400,000 loan assumed at say 2.75%. The savings is over $1,000 per month.

You also take over the term. ~ if you actually look at the amortization schedule, the savings over 20, let’s say it’s three years old, 27 years of savings, you’ll save more than the actual loan that was originally taken out. You’ll save more than $402,000 over the remaining 27 years by doing an assumption. So the benefits are huge, but you can’t do it as an investor on every single VA. ⁓

The reason being is VA has primarily always been an owner-occupant type of a loan program, but they do allow non-owner occupants to do an assumption.

The kicker is with VA, the person who got that VA loan has what’s called VA entitlement because they were a veteran.

It’s a certain dollar amount that they can have out in VA loans. If it goes to an investor, that entitlement of the seller has to remain attached versus if it goes to a veteran homeowner who wants to live in the property and they have sufficient entitlement, they can swap them. And so the seller is released from liability in an assumption, but they’re

entitlement then can be swapped and released as well so they can go get that next VA loan. In an investor scenario, you have to find a seller that is willing to leave their entitlement. We do see it pretty common and the main reasons we see that happen are ⁓

elderly person who doesn’t need the entitlement for future use. Sometimes we see two spouses that both have a military entitlement that they can use a different spouse’s entitlement in the future. And the third most common truthfully is sometimes somebody just has to get the house sold.

They don’t care. They need to be out of the home. And so there are investors that are scooping these up and they’re much better able to cash flow ⁓ because of what they’ve

like I said, you generally, unless you can find somebody selling a home for what the loan balance is, you generally still have to have some cash in the game. So yeah, it’s a great deal.

Michelle Kesil (11:52)

Amazing. Yeah, that sounds like a really good opportunity for people. What are maybe some criteria where this wouldn’t work for someone?

Craig O’Boyle (12:03)

⁓ One, I mean the main criteria is you have to qualify, right? It is a qualifying assumption. So the servicer of that existing loan is going to look at you as if you’re the buyer getting a new loan.

Now our role is to make that process easy because in the normal loan you have a loan officer or somebody to guide you step by step and in some cases you don’t really have that. So we knew that there was going to be challenges getting through this when we started. Matter of fact some of the challenges came from the servicer side who didn’t even know that they had these or had to do them. And we’ve spent a lot of time even training servicers that they have to do them. So our company steps in kind of as a middleman. Right. Our role is to come in and help

you get through that process with as little headache as possible. How we do that is familiarity number one. ⁓ My team who touches every file we do, they’re multi-decade lenders. They know how to look at the file upfront to say is this going to work. So that’s one stumbling block obviously is do you qualify. As on the investor side,

You have to buy it in your name. You cannot buy it in the name of an LLC or anything like that. Can you transfer that in the future?

Yes, but keep in mind, know, loans are designed, VA loans are designed to be in somebody’s individual name versus a company. But that’s going to keep out the big ⁓ institutional investors on Wall Street who have bought up so many investment properties because they obviously won’t be able to buy in somebody’s individual name.

Other stumbling blocks, ⁓ the process is a little bit longer than a standard loan. Standard loan generally is done in 30 days, sometimes quicker. An assumption on average takes about 60. Sometimes it’s going as fast as 45 days, but you need to expect the process to be a little bit longer. And then obviously,

people having the gap, since we’re talking about most investors have some cash to put down, so having the gap to pay. But those are the main stumbling blocks that we see.

Michelle Kesil (14:18)

Yeah, absolutely, that makes sense. So let me ask you this, why are you most focused on solving or scaling next when it comes to this business?

Craig O’Boyle (14:34)

Well, what we focus a lot on and have since we started is really just awareness that this world exists.

When we first started this, mean, I was going to real estate conventions and even the realtors, unless they had ⁓ quite a bit of gray hair, which I got here, didn’t even know what it was. I mean, this hadn’t been a thing. People weren’t assuming loans

since almost the 90s. So, you 25 plus years. So getting it out there and telling people what it is. We do a lot of this kind of teaching, be a class or podcast or whatever.

which helps and so ⁓ continuing to do that we also spend a ton of time teaching people who touch the most deals which is real estate agents so we do a lot of classes from there we’re excited about that our growth rate it has been ⁓ stratospheric truthfully ⁓

So for us, we’re always looking to grow the team with the right people to come on board that would be a good fit for helping people get through this. ⁓ Yeah, that’s where we’re at.

Michelle Kesil (16:33)

That’s exciting. So what like got you started in creating this specific business?

Craig O’Boyle (16:42)

Well, I have a partner in the company who owned the ⁓ largest title company in Colorado Springs and in the Great Recession.

I’ve been a business partner with him in various things for a long time. actually, I do more than this and I do development and all kinds of ⁓ different stuff. ⁓ Investing in property, you name it. But in his title business, he started a company called Short Sale Solutions, which helped real estate agents help

their clients complete a short sale. ⁓ I’m sure your audience probably knows what short sales are, but ⁓ you know, it’s when basically the house is not worth what they owe and they have to convince the lender to take less at a sale, which is very difficult. And so he helped people through it. Well, my background in helping veterans buy and sell homes,

When the rates changed, I basically went to him and I said, Hey, I see an opportunity. You had this model that helped people through short sales, but I see an opportunity with assumptions. Let’s, let’s marry the two. Now his company at the time was focused locally. And I said, there’s no reason we have to focus on just the Colorado Springs market. We can help people in all 50 states. And so we took the model, we married the two together. We brought in my lending ⁓ professional who had multi-decade background in lending to kind of run the file.

because even though I’m a smart realtor I’m no lending expert and so we had a good team and we built that from there and kind of had to work out some early kinks. There was a lot of resistance from both the marketplace and the servicers. The servicers don’t love doing this. This is what makes us so valuable. If they can find something to kill your deal or make it seem like it’s not likely to go, they lose nothing.

they don’t make any money doing an assumption. And if they can get rid of a low rate loan to lend money at a higher rate, there’s a lot of motivation there. So having somebody when you’re going through this difficult process, who knows where, wait, no, you’re wrong. You can’t deny it because of that, or you’re making an error here. Having somebody behind you that knows it in and out is crucial.

Michelle Kesil (18:57)

Yeah, absolutely, that makes sense. Definitely the people on your team and their roles are such important assets too. Yeah, have that scope of knowledge.

Craig O’Boyle (19:11)

Duffin Alley.

Michelle Kesil (19:13)

When it comes to growing your business, building relationships, growing that network as a whole, what do you feel has made the biggest difference for you?

Craig O’Boyle (19:29)

our classes, growing our network through our classes makes us very ⁓ relatable. We approach

⁓ We approach our methodology with how we’re a team member for whoever is taking a deal, whether it’s the buyer seller directly or whether it’s the agent who’s guiding them through it. We’re a team member. And so we approach our teaching on how can we make you successful, right? Whether you’re a realtor, how can we help you grow your business, do more deals, things like that? You’ve got a listing, right? How can we show you the best way to market that listing?

to get the most amount of tension because…

You know, if you’re competing against a home that doesn’t have an assumable mortgage and your home can be bought and a buyer can save $1,000 a month, $12,000 a year and $400,000 over 27 years. Well, that’s a valuable asset. You need to know how to market that. You might end up selling being on both sides of the deal, which is a great way to earn more income as a realtor. As an investor, know, showing you some of the resources out there to

help you get to the finish line and help you get the property that you’re looking for. And then one of the really cool things that’s come up and we teach this in our class as well is, you know, while we were very early to this space, there are some other resources that aren’t in the same area of what we do that have come in that we’re kind of partnered with that are very helpful for locating property and investing in property and stuff like that. So I think we’re a big asset to any

that wants to reach out to us go to our website AssumptionSolutions.com and we have our video class at the bottom of the home page teaches you about the whole process.

Michelle Kesil (21:24)

Amazing. So these classes are for everyone on your website. Anyone can go look at them.

Craig O’Boyle (21:30)

Yeah, absolutely, they’re totally free. Every time I do a new one, ⁓ I try to add it to the website because it is a shifting landscape at times.

Like I said, when we started this, mean, all of the servicers were saying absolutely not with investors can’t do it with investors can’t do it. And that changed. That changed in early twenty twenty three. We’re like, ⁓ OK, I guess this this isn’t against VA guidelines. We’ll allow it. And that’s grown. So, you know, if you saw us in a class on some of the other platforms a couple of years ago, well, the information is different now and there’s things out there that are a big deal, whether it has to do

with investors or the ability to obtain some secondary gap financing or the timelines that things take. When we started, I mean, this was commonly taken 120 days. So now it’s down to 60 on average. lots of updates that people can learn by going to our website.

Michelle Kesil (22:28)

amazing. Sounds like you have a lot of value to share. What would you say like is the class that maybe will help investors the most if they wanted to like just know exactly what to search on your classes?

Craig O’Boyle (22:43)

Yeah, mean, our class, it’s the same class in multiple locations on our website. ⁓ I have one other video recorded on there that was designed for agents just regards to finding property in a different way. But just our main class right at the bottom of the homepage, it’s got a picture of me on the YouTube screen, right? So. ⁓

Now, I would say there’s sections of that class that maybe you don’t need or maybe are more valuable to you. The first half of the class is broken down into teaching what is an assumable mortgage? How does it work? What does the math look like in an assumable mortgage? And then what do we do as a company to help you through it? The second half of the class, I tend to throw my realtor hat on and I speak more from ⁓ the idea of how can I help realtors get more buyers, get more sellers when they

get a listing, how to properly market it to get it exposed to the marketplace, and then the end of the class I kind of finished with some of the partner resources that have come into the market space. So it’s an hour-long class, you know, but it’s YouTube. You can throw it on one and a half speed, probably get it done in half the time.

Michelle Kesil (24:00)

I love that, that’s so valuable. before we wrap up here, if someone wants to reach out, connect, learn more from you, where can they find you?

Craig O’Boyle (24:09)

Yeah, absolutely. ⁓ Assumptionsolutions.com is our website. You can send us a message right through there. It goes to me mostly if I’m not available to my team, but I tend to be the one answering general questions so that they’re focused on files. ⁓

Our phone number is right on the website, 719-527-3380. Those are the two best places to catch up with us. And we’re very responsive. We try to get you same day as much as possible.

Michelle Kesil (24:41)

Well, listen, I really appreciate your time, your story, and your perspective. We need more people in this space doing things in this right way. So thank you for being here.

Craig O’Boyle (24:53)

My pleasure.

Michelle Kesil (24:55)

Awesome. And for those of you tuning in, if you got value from this, make sure that you’ve subscribed. We have more conversations coming with operators just like Craig who are building real businesses. And we’ll see you all on our next episode.