Buy vs Rent Active Duty

[Mike from back east]

Originally Posted by Terytee

Yeah, those scenarios would be a real headache and drain on the bank account, but I suppose so many folks do it these days because they can't sell in the current market.

True, and some are actually in it as a business and looking for long-term appreciation. Though the real estate market and business suck right now, in 20 years we can expect our homes to be worth a good deal more, so investors hang in there and look forward to a wealthy retirement. IMO we are looking at another 6-10 years before we see homes start to rise in value, it all depends on a bunch of economic factors that no one can predict.

Typically, as years go by, mortgage costs don't inflate as much as salaries, but annual rent increases (often tied to rising salaries) eventually do put an investor into a fairly nice cash flow situation.

Myself, I'd rather plunk my money into common stocks that pay nice dividends and be able to sell them via my online broker in 1-minute flat. Compare that to some homes which have been on the market for 2+ years, like one up the street which has declined to $290k from being listed at $430K in 2009.

[Paintchips37]

Thanks for all the replies. My sister has had really good luck with her rental property near Fort Leonard Wood. She leaves it in the hands of a property management company, she doesn't see much profit each month due to management fees but she is paying down the mortgage steadily. We hadn't considered the draw down and the effect that might have on the Colorado Springs area. So I think we will just rent. We can survive in a sub 1000 sq foot apartment/house and just pocket the difference. We are super stoked to come to Colorado Springs. We are currently stationed at Fort Irwin. WE MISS TREES!

[Bob from down south]

Originally Posted by Terytee

Yeah, those scenarios would be a real headache and drain on the bank account, but I suppose so many folks do it these days because they can't sell in the current market.

The colloquial term for those folks is "accidental landlords."

I think a person that could see themselves as a jail warden is the sort of person needed to make a happy go at being a landlord. If you're not the kind of person that can deal well with somebody making their problems into your problems, stay away from any situation that might lead to renting out your property like the bubonic plague.

[Cosmic Artifact]

imo that's just the thing about our system... myself I have been a renter all my life and I think I will skip the home owning part and just go straight into snowbirding in one of those giant motorhomes.

Most home owners the last 5+ years have been some really grumpy people, I have noticed alot of my friends constantly consumed by pressures all around me, besides does one really own the home in the end? the bank gets it back eventually after one decays to the point of not being able to work to pay taxes and such...

[Terytee]

Originally Posted by Paintchips37

Thanks for all the replies. My sister has had really good luck with her rental property near Fort Leonard Wood. She leaves it in the hands of a property management company, she doesn't see much profit each month due to management fees but she is paying down the mortgage steadily. We hadn't considered the draw down and the effect that might have on the Colorado Springs area. So I think we will just rent. We can survive in a sub 1000 sq foot apartment/house and just pocket the difference. We are super stoked to come to Colorado Springs. We are currently stationed at Fort Irwin. WE MISS TREES!

Paintchips,

Didn't mean to take your thread off course, but I think we both gleened alot of valuable information here. Whatever you and your family decide to do, rent or buy, I don't think you'll have any problems either way. There are many homes for rent in the area.

Fountain seems to be the logical choice for many Ft. Carson families, but don't think that you have to limit your choices to just that area. Most parts of CO Springs are still within a very reasonable driving distance to Ft. Carson, and soldiers live all over town.

Either way, I think you'll love it here. That's why so many of us military types retire here. It'll be a huge change, but a good one. Good luck!

[jmeador74]

Buying vs. Renting has been quite of a question for constantly moving military personnel. Its all a matter of what your personal desires are. There are some rewards and benefits to owning a home and then renting it out. Some would also say some headaches as well. Then there are less headaches to living on a military installation and/or renting a place and not having the worry/stress.

First things, first. I would not recommend using your VA loan to get a home that you plan to rent out later. Save your VA loan for your dream home for when you retire. Yes, you can use it more than one time and you can even buy two homes with it, so long as the home values don't exceed the maximum. Or, so I am told. I was told that each time you use the VA loan the fees that you pay go up.

Buying a home, I would recommend getting a home with 3 or 4 bedrooms. You want to buy a home that will easily rent. The average family is a husband and wife with two kids. So, depending on their needs they will get either a 3 or 4 bedroom rental. Get a cookie cutter home that doesn't cost a lot. Something that was not custom. The important thing is to not get attached to the home as it will be a business venture. Buy and use builder's grade materials and appliances. Look in to buying home that is a short sell or on the foreclosures list. Go to the website Colorado Springs Real Estate - Official MLS Listings - PPAR.com to do some searching. You will find a lot of great deals and if you get a house that is below market and below its appraised value, you may get away from having to pay mortgage insurance on a conventional loan. Meaning, you have 20% equity (home value) in the home.

I bought a home when I was stationed at Fort Hood and I currently rent it out. We lived in the home for almost 2 years. The home was a 4 bedroom 2 bath house with 2 car garage. It was my first home with my wife and we had a lot of attachment to it. But, over the years the attachment wained and we just see the property as an investment and business vehicle. We bought the home with our VA loan and then refinanced to a Conventional when the rates dropped. Because the home value went up we didn't have to pay the mortgage insurance. The poroperty is managed by a property manager in Killeen, TX for the last 10 years. Out of those 10 years we may have had about a years worth of mortgage payments we paid out of pocket. The house has always been rented and our property manager does a real good job of screening out bad tenants, keeping up with the maintenance of the home that needs done and sending us all the documentation of the work that was done on the house for our taxes. Since we have rented the house out: we have replaced the roof, replaced the HVAC, replaced the carpeting, repainted all the interior walls, exterior siding was fixed and repainted, ceramic tile replaced the linoleum throughout the house, back yard fence replaced, tore down the tree in the front yard and lot of minor work like plumbing/electrical issues that crop up from time to time. All of these repairs that were done; were done over the course of 10 years, were tax deductible along with the interest off of the mortgage. That alone allows your to itemize your tax deductions and take tax breaks on other things you do like donations, charity work and other things that you can now take tax advantage and breaks from. Where otherwise, you wouldn't exceed the normal threshold of the standard deduction to claim anything as deductions. Owning a home is an endeavor and it takes a lot of patience and a real good property manager.

Select a property manager that will take 10% or more of the rent and won't charge you any other fees unless the house is rented. Any property manager that charges less than about 10% of the rent will likely shore up his revenue with charges of going out to the home, service calls from the tenant and myriad of other things. My property manager only charges me 10% and thats all I pay them for their services. When the house is not rented they don't get paid. So, it's incentive for them to get the house rented.

Renting a house is not a bad way to go either. You just don't get the headaches of owning a home and the worries of renting the home out after you depart from Fort Carson. You just walk away and hand the keys over when your done and pay for anything that is not considered a part of fair normal wear and tear. You do have to deal with a landlord about service calls and they will get to you when they can. Some landlords will allow you to do the work and let you take it out of that month's rent. As long as you clear it with them first and show them how you plan to fix the issue and then show them the result of your work and receipts to deduct the cost of the parts and time for your labor.

This last part is your BAH is there for you to use as you see fit. You can use it to buy a home and have the military pay for your home while you are there. So, the equity you put into that house will not be your own money that you made, but what Uncle Sam gave you as a benefit. Why not use that money to pay down that house for the time you are there and create some equity for yourself. It has long been said that if you rent a home its just like throwing the money away. Yes, you get less headaches, but is it really worth it in the long run, when you are about to retire. Something to think about.

Well this is just my .02

[txdeployer]

I was stationed in Fayetteville, NC with my fiance. I ETS'd and was able to move with him during his PCS to TX. While in Fayetteville, he purchased our home with a 30 year fixed VA loan at 3.5%. We occupied the home for 2 years prior to the PCS. At the time, it wasn't a seller's market, so we researched to find a well known property manager with high reviews. We are currently living in TX with renters in our home. We've had no problems. The PM conducted background and credit checks at our request. Now, the only tricky part is that we still file that home as a primary residence for tax purposes instead of an investment property. This is a right afforded to Service Members who have occupied their residence for 2 years and intend to live there upon their ETS. This is also true for re-financing your VA loan. We are in the process of re-financing into a 15 year fixed VA loan at 2.625%. Because we moved on PCS orders, occupied the home for 2 years, and intend to return upon ETS, we are allowed to re-finance as our primary residence (very low %) vs. as an investment property (ie: rental property) (very high%).

If you and your wife decide to purchase (which I think would be best), you may want to jump right into the 15 year fixed before the rates jump back up. FYI we got the 2.625% from Navy FCU. One more fun fact is that the lender does not have to accept your home as a primary residence (if you're renting it out), but they can if they want to. For example: Quicken Loans will not recognize your rented out home as your primary residence regardless of your situation, whereas Navy Federal Credit Union will.

I hope this helps & I appologize if it is information overload.

Good luck!!