RElationships: Q & A with USMC Vet and Real Estate Renaissance Man Jon Lallande

Jon Lallande is a mortgage loan officer and real estate investor. As a prior Force Reconnaissance Marine and Scout Sniper, Jon loves helping military veterans build wealth through real estate. Jon specializes in teaching veterans about their VA loan benefits and takes pride in his ability to make financing real estate as quick and seamless as possible.

The VA (Veteran’s Affairs) home loan is a powerful wealth-building tool available to qualifying service members and veterans. I believe this is an under-utilized loan product that can help military folks get started in real estate and achieve financial independence. 

My wife and I recently purchased a home using our VA loan, and we couldn’t have done it without Jon Lallande. I recently had a great conversation with him about the VA loan, mortgage lending, and investing in real estate while working full-time. 

Doug: How did you transition from the Marine Corps to mortgage lending?

Jon: I started out wholesaling while I was still in the Marine Corps. I realized from that experience that I really enjoy working with numbers, so I researched different real estate and finance professions that focus on the numbers and finance aspects of the business. I came across mortgage lending as a profession and attended a home buying seminar with a loan officer that helped me with a lending product for a property I purchased. He showed me what his day-to-day was like and how much he made, and I realized that mortgage lending was a great fit for me and my interests.

Doug: Mortgage lending is your primary occupation, but tell me more about how else you’re involved in real estate.

Jon: I primarily do flipping and wholesaling on the side. I try to do 3 wholesale deals and 1 flip per month. For a while, I would say yes to any opportunity that came my way, but I’ve gotten better at saying no to opportunities that don’t fit into my strategy. I own a total of 85 doors, and 80 of those doors are with a partnership of which I own one-third. I’ve been offloading the few properties I own in my personal name, in favor of partnering with others on larger deals. 

This strategy fits better for my lifestyle as well, because the mortgage lending takes up a lot of my time during the week – sometimes up to 60 hours per week – so rather than doing other deals on my own and having to do everything myself, I can partner with others and contribute to tasks that focus on my strengths while they do the same. I’ve found that having partners where everyone brings something else to the table is where I’ve found the magic happens. Also, owning assets in a separate entity with others reduces my liability, as opposed to owning multiple properties in my personal name. 

Doug: On the mortgage lending side, how much of your business is VA loans with military buyers, and how much is conventional lending with investors or non-military buyers?

Jon: Roughly 75% of my loans are with VA military buyers because I’m able to get those offers accepted at a higher rate than a lot of other VA lenders. I also tend to click with military buyers better than other buyers. 10% of my loans are investors that want to do refinances, and roughly 5% of the loans are your standard first-time homebuyers using conventional loans. 

Photo by Brett Sayles on Pexels.com

Doug: Why do you think the VA loan is such a great lending product? Why is it a better way to purchase a property than a conventional mortgage?

Jon: This is my favorite question to answer and I could talk about this all day. I think the biggest pro is you can put zero down and you’re able to qualify for a higher purchase price. With the VA loan, you don’t have a debt-to-income ratio requirement like FHA or conventional loans. This means VA buyers can qualify for a higher purchase price than they would be able to without a VA loan. 

Another advantage is with the VA loan, as long as you have at least a 640 credit score, you’re going to be able to get a very low interest rate. So a younger enlisted service member can still get a fantastic interest rate, even if they have struggled in the past with credit card debt, student loan payments, or other consumer debt issues that may have negatively impacted their credit score. With a conventional mortgage, if you’re below a 740 your interest rate increases a little bit for every 20 points below 740. Not the case with a VA loan as long as you have a 640 credit score. 

The VA will give you the same low interest rate whether you’re buying a regular single-family home, a condo, a townhome, or a 2-4 unit small multifamily property. This is not the case with a conventional mortgage. You will have rate adjustments (higher interest rates) if you buy a condo or multifamily property. Also, for multifamily property purchases, FHA mortgages have something called a “self-sufficiency test” which means the mortgage payment has to be less than 75% (or whatever vacancy rate the lender deems fit) of the combined rents. This is very difficult to make happen in a high-cost market like San Diego or Washington, D.C. On the other hand, with the VA loan, we can use the projected rental income to help you qualify for the property.

Another big plus of VA loans is that lots of the VA lending guidelines are much more subjective than other residential lending products. Conventional mortgage guidelines are much more black and white with their rules.

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Doug: Are there any myths about the VA loan you want to dispel?

Jon: The most common myth is you can only use your VA loan once or you can continue refinancing your VA loans to conventional loans and buy an infinite amount of properties with their VA loans. Most lenders don’t tell their clients about the “one-time restoration”. What that means is that you can purchase a home on the VA loan, refinance that mortgage into a conventional mortgage, which frees up your VA entitlement to purchase another property, however doing so uses your one-time restoration. Once you use your one-time restoration, the only way to restore your VA entitlement is to sell any properties you have that were once financed by VA.

One thing to remember when using your VA entitlement a second time is that your funding fee does increase from 2.3% to 3.6%. You can reduce that funding fee if you contribute to a down payment. 

Some people mistakenly think that you can buy as many properties as they want as long as they remain under their VA entitlement, for example, if their entitlement is $500,000 they believe they could buy 10 properties that cost $50,000. If you try to buy multiple properties like that, the underwriters will say that it’s fraud because you are using your VA loan entitlement to build a real estate portfolio, moving constantly, not upgrading in size, and generally not using the loan in the way that it was intended. 

Doug: Correct me if I’m wrong, but a big advantage dual-military couples have is that each individual has their own separate VA entitlement, so if you purchase a property using one servicemember’s entitlement, that does not impact the spouse’s ability to use theirs on another home in the future. 

Jon: That is correct, and if you two purchase a home using your wife’s entitlement and there is still some of that entitlement left over, you can use that amount towards a home purchase on your VA entitlement. That’s another advantage you have being a dual-military couple. 

Doug: What software, tools, or products do you use in your real estate business that has provided significant value?

The Bigger Pockets Intention Journal has been great for me. I write down big goals I want to hit over a 90 day period, and I track my progress and hold myself accountable using the daily and weekly pages. 

I’m also a huge fan of the software Propstream. I use it all the time to look at comps of properties, pull data for marketing lists, and skip trace all in one software, it has everything you need to do real estate investing, with the exception of an actual CRM. 

Doug: What do you want your legacy to be?

I want to help men build their own real estate and business empires while helping them find fulfillment in their lives. Lots of guys out there want to do awesome adventurous things like sky-diving, shooting guns, and going on adventures, but too much of their lives are spent behind a desk.

I want to show other people how to live the life they want to live – not the life they’re being told to live. 

Doug: How can people contact you and learn more about you?

Jon: You can email me at Jon.Lallande@myccmortgage.com and you can follow me on Instagram @jonlallande22.

I hope you enjoyed this interview with Jon Lallande. Please send me a message on Instagram @honorandequity and give me feedback. We’re always seeking to improve our content to provide maximum value to our readers and followers!

How We House Hacked in San Diego Using the VA Loan

As some of you know, my wife and I are both active-duty military. A few months ago, my wife received orders for a command in Virginia Beach, VA so we started making plans to move to Virginia from San Diego. We told our landlord in San Diego that July would be our last month, and we found a real estate agent in Virginia and started submitting offers on homes. 

Then, the Navy threw us a curveball. 

We found out at the very end of June that we would be staying in San Diego instead of moving to Virginia. Our landlord had already found tenants to take over our condo in Little Italy, so we had to find a place to live in San Diego ASAP! We had also just arrived in Hawaii on vacation to visit family for two weeks, so that made matters even more complicated. Thankfully, I used my network of military real estate investors to find a fantastic mortgage lender, Jon Lallande of Cross Country mortgage and real estate agent Herbert Knox of Sentry Residential, and we aggressively started looking for homes in the San Diego area. Jon Lallande was able to provide a very competitive VA loan product which is usually unheard of: the 17 day close on a VA loan. Most lenders advertise 30-45 days to close a VA loan, and we knew that was too long and would not be competitive enough to get an offer accepted.

Finding a Home in a Competitive, Seller’s Market

We had to be especially aggressive not just because of our short timeline, but also because we had to lock down a house in the hottest seller’s market in U.S. history in one of the hotter markets in the country (Southern California). 

We submitted 5 offers on homes in San Diego from Hawaii, solely based on the video walk-throughs our agent sent us. We relied heavily on his feedback regarding the neighborhood, the layout of the homes, and the overall “feel” of the properties. 

When we were shopping for a new home, many of the homes we encountered were being sold by home flippers. These entrepreneurs had purchased a distressed 3 bed 2 bath single family home, fixed it up to look very nice, and put it on the market at full retail. We were not opposed to a regular single family home, however I knew finding a property with the added benefit of a separate unit to rent out would give us a huge advantage, both in the short-term and long-term. 

Finally, a seller accepted our offer. 

Of all the homes we looked at, this one was my personal favorite. It was far from a perfect home like those flips and it needed a fair amount of cosmetic work, but it had something most of the other homes we looked at didn’t have: a second unit to rent out. My real estate brain was magnetically drawn to this property because I know the best way to use the VA loan is to buy a 2-4 unit property, live in one unit, and rent out the others, also known as a “house hack”.

What is a house hack?

A house hack is when you purchase a 1-4 unit property usually conventional, VA or FHA loan as a primary residence, and rent out the other units, or rent out the extra bedrooms if its a regular single family home. Its considered a “hack” because you are using the extra income from the rent you collect to pay your mortgage. 

This strategy is especially effective using the VA or FHA loan because those lending products require little or no down payment, as opposed to a conventional loan which usually requires a 20% down payment. 

Exterior view of the home. Those stairs on the left go down to the downstairs unit.

Our New (Old) Home!

Let’s talk about the house itself. It’s a two-story, single-family home built in 1956 in La Mesa, CA – a suburb about 9 miles east of downtown San Diego. The larger, main floor of the house is the top floor which may seem odd, but the neighborhood is very hilly, and this home is built on the side of a hill. The driveway comes down steeply from the street, and when you walk in the front door, you’re actually on the second floor of the home. There’s a staircase going down to the bottom floor, which previous owners had drywalled off to create that separate living space on the bottom floor. So, all they needed to do was add a kitchen downstairs and they had their second unit to rent out. 

The home has lots of light and an open floor plan as you can see here. We have since sanded and refinished the hardwood floors.

The previous owners had been renting out the unit to a lady and her two sons who did not take care of the unit. There was no significant damage, it just wasn’t kept clean and there was a lot of minor damage from years of neglect. The owner was charging the tenant $1200 per month for the unit which is nearly half the market value for that unit. So we planned to clean it up a bit, get it painted, and find an excellent tenant to live below us. 

The home we ended up purchasing is definitely not one of those homes fixed up by flippers! It has “good bones” meaning there are no significant structural, foundation, or other major issues but it just needed some basic updates and minor repairs. For example, the seller didn’t know how old the roof was, so we had a roofing professional come out and make some repairs. Also, the home has original hardwood floors that looked weathered and discolored in many locations, so we had a professional flooring company sand and refinish the floors and they look fantastic now! We also had a painter come in and apply a fresh coat to the ceilings, walls, and kitchen cabinets. 

This is the downstairs unit we will rent out to a lucky tenant!

The “No Money Down” VA Loan Myth

Something that surprised me during the VA loan process, was the realization that the VA loan does not cover closing costs! You can include the VA funding fee (2.3% of loan amount) in your loan, but the closing costs must be paid out of pocket. Unless of course, you can negotiate for the seller to pay your closing costs, or have a large enough seller credit to offset these costs. Make sure you consult your lender on this so you don’t get yourself in trouble. The VA loan has strict rules on what you can and can’t do. 

Depending on the price of the home you purchase, your closing costs may only be a couple thousand dollars. Most of the homes I have purchased in the past have been investments and have been $100,000 or less, which means the closing costs have been $1000-2000. However, when you’re buying a primary residence in the San Diego area, you’re paying a lot more than $100,000! So the closing costs were significant to say the least. 

Don’t let this deter you from using your VA entitlement. In my opinion, the VA loan is the best way for military members and veterans to get into real estate. 

We should be getting a tenant in the downstairs unit within a week or so, and we’re continuing to make updates and improvements to the upstairs part of the home where my wife and I live. If you’re already a homeowner, you know that no matter how much work you do, there are always more projects popping up! Thankfully, we found a fantastic handyman that can do all kinds of work for us at a reasonable price. 

If you want to learn more about the house-hacking strategy, Craig Curelop and BiggerPockets published a book about it called The House Hacking Strategy: How to Use Your Home to Achieve Financial Freedom. I have not personally read it yet, but I’ve read many books published by BiggerPockets and they have all been fantastic.

I hope you found value in this article. Please send me a message on Instagram @honorandequity and let me know your thoughts!