Military families have major financial decisions to make every two to three years: With every PCS, they need to decide whether they will rent or buy. While the US Census shows that the average American homebuyer lives in a home they purchase for roughly 13 years, a military family has likely moved at least four or five times during that same period.
With such a high rate of moving frequency, why then would any military family ever consider buying a home? Are we all just crazy?
My unscientific and entirely anecdotal based assessment of the thousands of military homebuyers each year suggests otherwise. No, we’re not crazy; we’re just eternally optimistic.
To have faith in the housing market means that we have faith in our government’s ability to keep our homeland safe and our markets strong. After all, if we didn’t have an eternally optimistic faith in our government, then why would we ever entrust our servicemember spouse to it?
Even the most optimistic among us, however, has to recognize every now and again that it simply doesn’t make sense to buy a home each time we PCS. My military family chose to rent during our last duty station. We owned two rental homes by this point, and that was as much risk as we could financially handle until we rebuilt our savings.
Now, almost five years since our last home purchase, we are ready to purchase again. When making the decision to buy or rent, your military family should establish some firm criteria before you go home shopping to make sure your budget doesn’t run away with the first adorable home you find online
We base our decision of whether or not we buy a home on two key points:
Our definition of affordability.
For some military families, this means how much house they can buy outright with cash; for others, it means how much house they can purchase with a zero down, 30-year VA Home Loan. And for some, it means how much house they can purchase with a 20% down payment on a 15-year mortgage.
You have to define affordability for your military family, because what works for other military families or for the traditional civilian market will likely not work for your family’s particular circumstances. Check out How Much House Can You Afford on Your Military Family’s Budget? to help better understand housing affordability.
Buying a home that meets rental market demand.
As military families, we need to keep our exit strategy in mind whenever we rent or buy a home. If we’re renting, we make sure that the lease contains a military clause to allow us to move when Uncle Sam sends unexpected PCS or deployment orders.
These kind of time crunch constraints mean that if you are a homeowner, you need to be prepared to sell your house at any given time unless you’ve already predetermined that you’ll rent it out. If you plan to join the ranks of military landlords, have you already identified a property manager, a potential rental price point, and the general market demand for your house? The ideal time to do that is before you sign the purchase agreement for that property.
If we don’t find that a home and our budget for a PCS will fit both of these criteria, then we don’t buy. What about you? What criteria do you use to make the decision of whether to rent or buy?