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When/how did you know it was the right time to buy a house while still in the military? My husband and I are PCSing in December and would love to own our first home. The thought of "only" being in it for four years and to recoup the cost of it when we PCS again is very overwhelming. We are also faced with the option of renting it and putting trust in other people doesn't sit well with me. What are some of the things you considered before buying a house? What were the pros and cons?
I think there are far more positives to owning a home vice renting. However, I'm not one to tell people what to do with their money. That said, I've owned several homes during my military career and have always come out ahead. When I did rent my homes, I never had a problem with renters. Sure, there are horror stories but nobody gives you the passionate story about the renters who always paid their rent on time, took care of your house, etc.
Some things to consider-
1- The market where you are moving to. It's unlikely the area has an over inflated housing market. So you can be fairly confident you're not on the wrong side of a housing bubble.
2- It won't be your retirement home so consider who you are going to sell to. For example, it's not bad to buy a home that has an extra bedroom that you don't need. You now have a home that can be an option for a larger family than your own.
3- It is generally cheaper to pay a mortgage than to pay rent. Especially with today's interest rates. Plus you have tax advantages with home ownership.
4- You can turn a profit after 4 years. I owned a home during the market crash but my area wasn't hit. I sold my home that I owned for just shy of 5 years and had a very healthy profit.
Cons
1- You can't walk away from a home without seriously damaging your credit. Avoid this by not spending more than you can afford. Don't fall victim to all of the crazy mortgages-- paying interest only, variable rates, etc. A lot of people have lost their homes because they had champagne tastes but a 6-pack budget.
2- You might find that when you leave, it's not the right time to sell. In that case, you'll need to rent it. Personally, I don't think that's a huge con. I'm renting one of my homes out right now. It's not a big deal. You can hire a property manager if that makes you feel better. I manage my own homes because it's cheaper for me and I'm the one selecting the tenant. If I'm not comfortable with a potential tenant, I won't rent it to them.
Being nervous purchasing a home for the first time is completely normal. I've owned 5 homes and have rented 3 of them without a single problem. Just be methodical with your purchase. Don't buy a home that you can't afford--- banks will let you do just that. Find a good realtor.
I'm on my fourth home, and have the three others as rental properties. None of them have ever lost any money, and one makes $50 a month. When we worked with a realtor, we had her pull the rental analysis on each potential house to make sure rent would cover the mortgage. Now, all the homes are building equity and will one day be sold for profit. Renting out houses is really easy if you have a management team, and a clean well kept home. We hired a team, like Keller Williams, to handle finding renters, collecting rent, background checks, and evictions. It costs 10% of the rental income, be we do nothing and they deposit the rent every month. So easy and carefree if the homes don't need repairs or updates.
The longest any house has been empty has been 7 days. We have had some rent in 4 days. The key is to advertise (our management company does not) somewhere other than craigslist (MLS) and to charge an appropriate rent. Too cheap, and people think there is something wrong, too expensive and they don't want to pay it. We always gotten what we asked, but that is because we let a professional team determine the price.
We always knew we wanted our own house. We just did not have the money. We returned from a 40 month tour in Europe in 1980, VHA (Variable Housing Allowance) was just created, my wife got a job, the kids were old enough to go to 'sitters'. We took a chance and bought a small 3 bedroom 1 bathroom home. Now it is 32 years later, we are both retired and living in our fifth home. We have no real regrets and things worked out for us. We were frugal and saved for the future. With today's BAQ, the possibility is more achievable. There are certain risks and perhaps a few hardships. We would do it again with no regrets.
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