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Advantages of Renting
- Bad Credit Options
- No responsible for All the Costs
Purchasing a home can often take 30-45 days. Renting can be done in 24 hours. Sign a lease and move-in. This can be hugely important for military families with just 10 days between arriving and reporting to the unit.
Rents might rise over time, but for the most part, your rent is your rent. Homeowners often see their mortgage rise and fall every year as taxes and insurance change.
Ready to move? 30 day’s notice and you’re out! When you buy a home, after leaving, it can take months to find a renter or buyer.
Bad Credit Options
While landlords certainly care about your credit, you are more likely to find one willing to work with sub-optimal credit scores than you are a lender for a home purchase.
Not Responsible for All the Costs
Tenants don’t pay for normal wear and tear. And when the A/C goes out, you might be annoyed, but probably not as annoyed as the owner who is forking out $5000 to fix it.
Advantages of Buying
- Build Wealth
- Better Options
- No Landlord
- Tax Benefits
- House Hacking
If you pay rent for thirty years, you are still a renter. If you pay a mortgage for thirty years, you own a house.
Rental homes are often in not as good condition as rental homes. While Fort Hood has plenty of rentals on the market at any time, if you are looking for something in particular like land or pools, the pickings will be much slimmer.
Don’t deal with a property manager walking through your home every three months, pet restrictions, waiting days or weeks for work orders, and asking permission to sneeze.
Mortgage interest is deductible, as are many other costs of homeownership. If you move and turn it into a rental, you can deduct depreciation, too, which is $1000s a year.
When you rent, it is only for the term of the lease – often twelve months. Even without a reason, an owner can then kick you out. This happens not infrequently as military members are PCSed back to Fort Hood and want to move back into their home, or an owner wants to try to sell instead of continuing renting.
Choosing to buy opens up opportunities like house hacking. Buy a foreclosure or a multi-family which you can then turn into an investment. Not only are you no longer paying rent – you are collecting rent!
I recommend buying your home if you meet one of the following criteria:
- You plan on living in the home 7+ years (a “forever” home)
- You plan on owning the home 7+ years (you are okay with renting when you move)
- You have very specific needs (privacy, pools, homes with land, specific home interior, etc.)
- You want to build real estate wealth
- You have 100% VA disability (you pay no property taxes)
Many members of the military are gun shy when it comes to buying a home. They don’t expect to be in any one place much more than three years. Unlike other professions, many soldiers retire having never owned a property, and only then begin earning equity in a home, twenty years behind people who bought early in their careers.
I recommend considering turning it into an opportunity. A savvy buyer can purchase an investment worthy home each time they PCS. It’s a little bit more work, but the long-term financial rewards can be tremendous.