Renting vs. Buying: Pros and Cons for the Service Member

Exploring the choice:

One of the critical decisions that active duty military personnel often face is whether to rent or buy a home. With the transient nature of military life, coupled with the desire for stability and investment opportunities, weighing the pros and cons of each option becomes as essential as overwhelming. In this blog post, we'll delve into the some of the considerations the service member and their families should take into account when deciding between renting and buying a home at their current or next duty station.

Pros of Renting for Military Personnel:

1. Flexibility: Renting provides flexibility, allowing military families to easily relocate with minimal financial and logistical burdens. Given the nature of military assignments, the ability to move without the hassle of selling a property can take a load of stress off during your PCS season.

2. Maintenance Responsibilities: Renting typically means that the landlord is responsible for maintenance and repairs, relieving the service member and their family of the financial burden and time commitment associated with upkeep. This can be particularly beneficial for military personnel with demanding schedules or frequent deployments. Less work to do outside of work is a big incentive for most service members.

3. Lower Upfront Costs: Renting often requires less upfront costs compared to buying a home. While purchasing a home may involve a down payment if you decide to use something outside of your VA loan, closing costs, and other expenses, renting typically requires a security deposit and possibly first and last month's rent.

Cons of Renting for Military Personnel:

1. Lack of Equity Building: Renting does not offer the same opportunity to build equity in a property versus owning a property. Instead of investing in an asset that may appreciate over time, renters essentially pay for temporary housing without accruing ownership benefits. You are paying somebody else's mortgage and getting nothing out of it when you leave.

2. Limited Control and Stability: Renting means living in a property subject to the landlord's rules and decisions. This lack of control can lead to uncertainty regarding lease renewals, rent increases, and potential changes in living arrangements that may not align with the preferences or needs of military families.

3. Potential for Rent Increases: While renting can initially seem more affordable than buying, renters are susceptible to rent increases imposed by landlords, especially in competitive rental markets. These increases can impact budgeting and financial stability over time. If you go to renew a lease and you are expected to pay an increased monthly rent, you are backed into paying it or immediately figuring out where you have to move within a short window of time.

Pros of Buying for Military Personnel:

1. Long-Term Investment: Buying a home allows military personnel to build equity over time, potentially leading to financial gains when selling the property. This can serve as a long-term investment strategy and provide a sense of stability and security for military families. Bell county home prices appreciate 2-3% every year, over the span of a typical 3 year assignment that can be a quite profitable and almost passive investment. If you can swing a stabilization because you like where you are, you're talking even more potential for profit.

2. Personalization and Control: Home ownership offers the opportunity to personalize living spaces, make renovations, and establish roots in a community. Military families can have greater control over their living environment and enjoy the pride of home ownership, making a home for the duration of your assignment

3. Utilization of VA Home Loan Benefits: The Department of Veterans Affairs (VA) offers eligible service members access to VA home loans, which often feature competitive interest rates, no down payment or private mortgage insurance (PMI) requirements, and flexible qualification criteria. These benefits can make home ownership more accessible for military personnel. Getting into a house without a down payment will save you thousands up front.

Cons of Buying for Military Personnel:

1. Potential for Financial Risk: Buying a home involves financial commitments such as mortgage payments, property taxes, insurance, and maintenance costs. Military personnel facing frequent relocations or uncertain deployment schedules may encounter challenges in selling or renting out a property, potentially leading to financial strain. I want to hit on buying your house at what it's actually worth and not what the seller thinks it's worth, overpaying can lead to a huge issue down the road on a short term investment.

2. Market Volatility and Appreciation: The real estate market is subject to fluctuations, and home values may not always appreciate as anticipated. Military families purchasing a home in a volatile market or during a period of economic uncertainty may face challenges in realizing returns on their investment. I want to add that purchasing next to a base can completely counteract this, the service members will always need a house and the base housing is usually on a back log, and rent increases well above BAH.

3. Limited Time for Research and Decision-Making: Military assignments often come with tight timelines for relocation, leaving little time for thorough research and decision-making when purchasing a home. Rushed decisions may lead to regrets or unforeseen complications down the line. You have to find an agent who is going to work with you and give you a no bullshit answer to the hard questions.

Conclusion:

Deciding whether to rent or buy a home is a significant consideration for military personnel, with implications for financial stability, lifestyle preferences, and long-term goals. While renting offers flexibility and lower upfront costs, home ownership provides the opportunity for equity building, stability, and personalization. Military families should carefully weigh the pros and cons of each option in light of their unique circumstances and priorities, seeking guidance from financial advisors, real estate professionals, and fellow service members to make informed decisions that align with their needs and aspirations. Do your research, ask the hard questions to knowledgeable agents, lenders, and trusted friends who've been in this world before.