Military Home Owner Woos?

A new comment on a prior posting got me thinking. 

How are recent changes in the US housing market impacting military families, if at all?  How many of you are having issues trying to sell or rent your home pre or post PCS?  How many of you have decided to purchase a home recently and why?  How many of you have decided to delay purchasing a home and why?

For those of you trying to sell a home:

Are you having to double up on mortgage payments due to selling issues?

Are you staying in one location while your spouse transfers to a new duty station because you cannot sell your home as fast as you had hoped?

Have you tried any of the below websites with success or did you strictly utilize a Realtor?

Military By Owner

Automated Housing Referral Network

Military Owners

For Sale By Military

Military Homes For Sale

My Military Classifieds

Military.com Classifieds

Sound off on this topic and let us know any type of problems/successes you are having and how home ownership has impacted your military family.

Comments

[liberal army wife]

we haven't sold ours... so we are "winterizing" it and having a neighbour be a caretaker. I know so many people who can't sell up here.. We will put up with a mortgage and paying rent. No - I will NOT sit in the house and wait for it to sell, whilst he is at the new duty station. Caveat - we have no minor children, and we can afford this - it'll hurt, but we can do it. No way would I buy a house now. Even if we sold this one, I don't want to try it in this market!

LAW

[Andi]

We own a home in the Washington, DC area, but rented it out during this PCS. The market was on fire when we bought the home, but slowed down quite a bit about a year or so before we moved. Housing prices began to lower. In many cases, as much as $150,000 less than what they had sold for a year or two before.

Renting is a good option and the woman who left the comment should at least look at that option. It's better than paying two mortgages.

For those in the Northern Virginia area, holding on to a house and renting it out may turn out to be a great option given the BRAC situation. I'm pretty sure the market will pick up drastically when many DoD offices move south to places like Ft. Belvoir.

[Jan Wesner]

We bought a house last year, for the first time ever. One thing we did was make sure our total monthly payments (mortgage, insurance, taxes) would be covered by several different ranks' BAH. That way it'll be attractive for military folks to rent (or at least we hope it will be) and our mortgage will (again, we hope) be covered.
I know a lot of people, though, who moved here to Florida this summer and decided not to buy.
As for realtors, we did the USAA program where they give you cash back. We fired the first realtor and the second was equally useless - we found the house we wanted to buy ourselves and then she set up the showing. We should have gotten the commission instead of her!

[Marine Wife]

I don't really have any answers, just another question. We'll be moving into an area next year that isn't close to a military base. I don't want to buy because I don't think we'll be there very long. Any advice on finding rental property/realtors in the West Palm Beach area?

[AFWife_Niki]

My hubby and I bought our first home this July and moved into it in August. We bought it from one of my husband's co-workers who was separating from the Air Force. It's a really nice house, has everything we wanted, and is more than covered by DH's BAH. The guy sold it to us for about $5,000 - $10,000 below the appraisal value, basically because he was trying to unload it so he could move home. He didn't list the house, he just mentioned that he was going to sell it one day at work and DH told him we'd buy it. At first I was highly upset because DH didn’t even consult me on this. (I still am, but that’s another post.) I’m straight out of college and DH is an E-3. I wasn’t sure we were ready to buy a home. But our fixed mortgage is only $140 more than the rent we were paying at our apartment, and the rent is rising.

DH’s main reason for buying the home is because he wants us to own some property and since we bought it below market value, we should be more than able to turn a profit when it’s time to leave. He has one of those jobs where he can only be stationed at two bases in the whole, entire world, both of which are stateside. And since he is stationed at the main base for his job and the AF is not letting anyone cross train out of this particular job right now, we will be here for the next 4 years of his enlistment. As of now, I don’t know what’s going to happen after then. Some people in his job have been at this base for more than 10 consecutive years. That sucks.

I hope the housing market will rebound by the time we’re ready to sell. According to the local board of realtors, the home sales in our area doubled this year from last year. But it took one of my co-workers a long time to sell her home before she was able to move into her new one. My biggest concern is all the changes and updates DH wants to do to the house. I keep telling him to be careful not to put too much money in the house because we'll probably only be here for four years and we might not make all the money back.

[Kim]

We own a house very near Fort Gordon, GA. in a really great and up coming town. We have had our house on the market for 7 months now going on 8 months. The first realtor we had didn't show it as much as I would have liked and I had to keep calling her to get her to hold an open houses. We never got feed back from her. We now have a new realtor and she is so much better than the last one. She lives in our nieghborhood and gives us feedback everytime someone comes in the house. She even calls other realtors that have shown it to get their take on the showing. We have been advertising it like crazy and being that we only have 20 more days here we have put it up for lease. Still no bites though. The agent has advertised on base and in every other place she can get to. They even set up a virtual tour online. We have four kids 5 and under and will not be able to make double payments each month. I also will not stay here to sell the house. The movers will be here tomorrow and then we get to trek acoss the US and go to Fort Lewis, WA. in 20 days. We have one son in school who has to get there and get settled before the holidays. This drop in the market has really been bad. We bought the house 2 years ago and the neighborhood was just being built. The houses sold fast, but now there are so many leaving right now that we are all having a really hard time selling. We will not buy at all until my husband retires and we find a place to stay. This real estate game is no fun.

[Janet]

Great topic, Love My Tanker!

Buying a home is an issue that should be given more consideration by military families. There are many families who simply refuse to buy because they're afraid of the unknown market situation when they get transferred, which is inevitable for most. That can be a scary thing.

That is an unfortunate decision for many. A number of studies have shown that in the US, the absolute BEST way to create wealth (a "nest egg" for retirement, if you will) for a middle-class family is through home ownership.

Yes, there will always be occasions when someone may get transferred when the market is in a downturn, as many parts of the country are now. In those instances, as Andi mentioned, consider renting out the house until the market improves and you can sell with a profit. Those market corrections will happen, but the market always recovers, if you can hold out long enough. And owning real estate is one of the safest investments you can make, provided you educate yourself and buy well in the beginning.

In fact, that is an important key to making money in real estate. Try to make your money up front by finding a house that the sellers need to sell quickly and are willing to accept less than market value for. And never buy the most expensive house in the neighborhood. You'll make a LOT more money when you sell if you buy the least expensive house in the neighborhood. You can make improvements as you can afford them, but you will have made a significant investment in your family's financial future by buying a home.

Jan's comment makes a very smart suggestion: when you buy in a military area, make sure your mortgage payment plus taxes and insurance can be covered by the BAH in the area, and you can be fairly confident of being able to rent it to another military family if necessary when you get transferred, without taking a big hit. You'll continue to receive the tax benefits of owning, even if you have to rent at your next duty station!

Yes, there is always the possibility of damage caused by renters. But that is what insurance is for. If you have a good insurance policy, you shouldn't have too many worries there. [A quick aside while I'm mentioning insurance. If you have not yet joined USAA, do it TODAY. They provide, hands down, the best insurance coverage you'll find, at the best prices, with the best customer service. I used to get calls all the time offering to "save me money on my insurance." All I had to say was, "My insurance is with USAA," and that cut them short. Every time. The usual response was, "You're right. We can't beat them. Thanks for your time. Good bye."]

As another poster mentioned in the earlier thread referenced, even if you only "break even" on the sale, you still will have saved money because of the huge income tax advantage home owners receive. That mortgage interest deduction really adds up, and will save you a considerable amount at tax time. I've always received a tax refund because of my mortgage tax deduction.

And most times, you will have a nice profit that will provide a down payment for the house you buy at your next duty station. One thing that some people don't recognize is that the amount of down payment you make can affect the type of loan you qualify for, the interest rate you have to pay, and whether you have to pay for private mortgage insurance. That's besides the obvious effect of lowering your monthly payment because the mortgage is smaller.

Another thing that most people don't realize is that selling your home is one of the few ways you can make TAX-FREE INCOME in the United States. I haven't checked lately, and since US tax laws change so frequently, it may have changed since I last looked, but it used to be that a married couple could bank up to $500,000 in profits from selling their primary residence without paying a dime in income taxes! And they can do it every two years.

I know one real estate investor who chose the neighborhood his family wants to live in, because of the school district for the kids, and every two years, they find another house to buy in the same neighborhood and move (which military people are accustomed to anyway), banking tax-free income every time. He's built a sizeable investment fund this way, which he invests in - what else? - more real estate.

Do you have any idea how much faster your money will grow if you don't have to give 20-30% (or more) to Uncle Sam every time you make a dollar?

I can't tell you how many military retirees I've heard lament the fact that they never bought a house till they were ready to retire, and then they didn't have money saved for a down payment, and were totally unfamiliar with the process. That experience is invaluable, because you learn something new each time you go through the process.

I also know a number of military retirees who are relatively well-off in their retirement years specifically because they invested in real estate throughout their military careers. Don't miss this important opportunity that's available to you.

If you educate yourself and do it carefully, buying and selling homes as you move around the country (and the world)is one of the best ways available to families in the income brackets of our military to make substantial amounts of money. And it's done with very little risk, relatively speaking.

And LAW, don't give up. This is exactly the time when you want to be buying! When there are lots of sellers out there who are having to unload their houses for whatever they can get. This is the time a smart buyer makes money! That's why it's called a "buyer's market." Go for it! Just don't overextend yourself.

My apologies for "hogging" the comments. I feel it is SO important for military families to have this kind of information. In fact, that's exactly why my company was started. I'm getting a bit ahead of myself, because I haven't written the section ywr about home ownership and real estate investments, but I wanted to post this information here since the topic is being discussed now. Please check out the other FREE financial information available for military families at http://www.Military-Money-Matters.com/ . Sign up for our RSS feed, and whenever we post new information, you'll be able to access it in your browser, just like SpouseBUZZ.

I hope you find this information helpful, and I would welcome any comments you'd like to make, using the Contact Us button on the site. Your comments will help us know what kinds of money-related issues you need (or want) us to cover, to help us serve you better.

My advice? Buy as soon and as often as you can, being careful to investigate the market, the neighborhood, and the house itself. If you do it right, you'll win every time. There's no better way, at this income level, to make large amounts of money in short amounts of time.

Best wishes,
Janet

[Love My Tanker]

Thanks for all of the input and for sharing your stories. I know that it will help other spouses/families.

Janet, thanks so much for taking the time to write your comment, I visit MMM from time to time and find it valuable.

[Rose]

we are hooked here,luckily we had the new order locally in san diego. when hubby offered the information about our condo depreciation, the detailer was very understanding. as far as we can stay, our total cost is lower than BAH and we can get tax break from it too.what sucks is we don;t have private garage, yard for kids(one plus one more in the future) I am operating an online business from home, which needs lots of storage space. I have utilized the 9 ft high ceiling to the maximum. but my husband has 4 more years to retirement, we will move by then. hopefully with the interest rate cut and inflation hikes. we can get out of it without losing the game.BTW we are in san diego, we rode the high wave , we sunk.

[Sarah]

We've had our house in Jacksonville on the market for 8 months, priced just so we could break even (even though we had made many improvements), with no offers.I stayed for another 2 months, while husband pcs'ed to Hawaii, hoping something would happen. We are now trying to rent it out, through a property manager. This was our last and least favorite option, as we are not going to be anywhere near the house for at least 3 yrs, and our neighbors weren't crazy about having "renters" move in, either. There is just too much new construction in the area and the builders are offering rock-bottom prices with crazy incentives AND/OR people are just terrifed about buying now, which makes no sense, because it is truly a BUYER'S market now.
We are now paying mortgage and rent on an small apartment, instead of being able to move into something more to our standards.
I wish we had never bought it...

[Angela Black]

I purchased a home near Cleveland, OH about 4 months before I met my husband. We were married a year ago, and I moved to NY to be with him. The house has been for sale for a year with NO interest whatsoever! Since I have only owned it for 3 years, there is only about $2,000. equity in the home, and realty cost are close to $8,000. so even if we could sell it for the price we purchased it for, we'd still be losing $6,000. Not only that, but our realtor is now saying to sell it in this market, we'd have to lower the price to $20,000. less than we purchased it for! The situation is so hopeless!! I would advise other military families NEVER to purchase a home until your spouse is ready to retire!!!!

[Kate]

When we got orders to PCS to Ft. Stewart - I put our mobile home on the market. This was kind of hard to do since we don't own the land it is on - I had to find someone who dealt with mobile homes on rental property. The market in the Ft. Hood area is flooded with new homes being built in my opinion - and even though we were the only owners of our home and kept it up well - it still hasn't sold. I won't even be making a profit on the sale of the house - We will actually lose money on the deal. I have it for sale or lease and finally got a renter in mid September. It is real hard to have your BAH taken for your housing on post and then have to turn around and shell out more for a house you want to get rid of. There is nothing wrong with it except we have outgrown it and don't know where we will end up next. Yes the Army will move it - but that is more of a hassle than you really want to get involved in - been there & done that. If anyone has any suggestions or maybe wants my house - let me know.

[Trisha]

I am saddened to hear all of these negative comments about buying a home. I am an AF wife, we bought our first home in Colorado Springs in 1999 and PCS'd two years later. We broke even on that home. We just bought our second home in Northern Virginia over the summer. We waited until we got to a good location and financial situation to buy. We couldn't bought years before, but we didn't have the money and it was mostly a seller's market. We searched for the home for us and we bought it just below highest market value. We already have equity in the home only a few months after purchasing it.

I don't think anyone should take one BAD experience and let it live their life. Ok, so you happened to buy a house in a location or a time that isn't optimal to sell. If you can rent it out (which more times than not you can), you will not be paying two mortgages, but rather one mortgage since the rent should be the mortgage plus any property manager fees. Take that experience and change your next one for the better.

Like Janet said before, real estate is prime investment opportunities. The problem may not be that the market is slow, but rather the location of the home. If you buy a home in an area that is highly military you will find it difficult to sell particularly if it is more than the military member can afford or if all houses are selling at the same time.

It is a strong statement to advise ALL military families to NEVER buy a home until retirement. That is a wrong statement to make. If someone can afford it, they read up on real estate and know in advance the risks, they shouldn't ever be discouraged to buying a home.

Base housing isn't for everyone, and unless I am overseas, I will never live in base housing. And why pay the exact same amount in rent for an apartment or house when you can buy one yourself and get the tax benefit.

I recommend that ALL military families ALWAYS buy a home at their new location regardless of how long you have left in the military.

[Shannon]

It is a buyer's market right now. Sellers are having a horrible time with the housing market. Foreclosures in our area are up 107%.

Our rule of thumb is never buy anything and pay market or full price. We only pay what we could sell "it" for in 48 hours (house, car, etc). We've had to sell that quickly before during moves.

We bought a few homes over the years for retirement and rented them, but have landlord horror stories. (Janet) the homeowner's insurance would not cover most problems or if they did it would raise our rates on all the homes and therefore not an option. The latest problem was a fellow military family. They had no pets when they applied. After 7 months, I was fined hundreds by the city for the 5 ft. wall of trash and waist hight lawn. Upon repossesion, there was over $5,000 in damages with dog feces.

It is difficult as we too are hundreds of miles away from our rentals, but my advice for renting your home is:

1. Get an airtight self-renewing lease (might not be legal in some states).

2. Check them out - credit scores, drive past their current residence if you can. Pay attention to the condition of their car.

3. Have someone collect the rent personally at the residence. They can usually see if they have moved in 19 cats and built the meth lab. Yes, that has happened too.

4. About cats and dogs. Never, never, never. I have pets and hate saying it, but I have to bring my 5 small kids with me to clean up after the animals in the house.

5. Don't rent to family or anyone else you have issues with evicting. It may come to that.

6. Keep rent reasonable (sounds like you all have figured that part out). 1 month vacancy is equal to $50 less a month on a $600 rental. I even send some tenants a Christmas card in Nov. saying take $50 off your Dec. rent.

7. Consider locking in a price and selling on contract for 1 year. The market can't get that much better in 12 months.

8. Just in case you need them, fill out the eviction papers, purchase the money order, and stamp the envelope for the local court. Learn the eviction and "emergency eviction" process. Buy a software to keep track of everything. Send everything important certified.

I know I sometimes sound cold harted, but we have sacrificed so much to build what little we have. I have literally cried when I have seen what others have done to my homes. Good luck on what ever you decide, just keep your family well guarded as you are the only one who will!
Shannon

[Janet]

Shannon,

Some great advice, obviously spoken from the wisdom of experience. Thanks for sharing your experience with others who may be forced to rent out their homes due to current market conditions.

Sorry to hear your insurance policy didn't cover your losses. You are absolutely right about renters with pets -- they just don't seem to care if their pets ruin YOUR carpet, etc.

Excellent advice to drive by their current residence and check out the condition of their car. Also, if at all possible, talk to their current landlord. A credit check is a must! Have an authorization form printed out for them to sign when they sign the lease application. They will have to give you their SSN in order for you to run a credit check. If they don't want you to run a credit check, there's a reason -- don't rent to them!

Put a clause in the lease that gives you the right to inspect (during reasonable hours) on prior day's notice (which can be less than 24 hours). And then don't tell them you'll be too far away to do it. If there's any chance you or hubby will be in that area, call around dinner time, tell them you just arrived in town, and you'd like to come by and do a walk-thru inspection at 9-10 a.m. (or so) the next morning. And if you can't make it back to that area, ask a friend to inspect for you.

For those of you who are stuck renting out your homes, an excellent resource for new landlords is http://www.MrLandlord.com. That guy has some great ideas about how to get better renters, and how to get them to pay on time, without being draconian.

And again, Shannon is right. Don't rent to anyone you'd hesitate to evict. And be prepared to do it. You have to protect YOUR family.

Best,
Janet

[Kathy]

I think that it is really sad that some pet owners make it bad for the rest of us. I have 3 dogs and 3 cats and my rental home looks BETTER than when I moved in. I pick up feces off a 1 acre lot every day and most people who visit don't even know I have pets except for the crate by the door. I train my dogs and I have 2 therapy dogs and they are cleaner than most people's husbands and kids. There are those people who have wonderful pets and care for them exceptionally and for their rental home. I have paid out of my own pocket several times to have my carpets professionally cleaned just because I want my children on clean floors--even in rooms that no pets are allowed in. You can rent to responsible pet owners. Ask them about the level of training their dogs have. Ask them if their previous landlord would give them a good pet reference. My landlord said she couldn't tell I had animals here and could have as many as I wanted as long as I stay within the county pet policies and kept the property up. Also, ask if their dogs are crate trained. That is a sign that the pet owners take care of their animals and don't leave them to be destructive when not home. People with trained pets and emotional support pets for special needs family members always make better pet people to rent to. If they are coming from a long way away, ask them to have 2 neighbors give a reference that they don't let their house get torn up or even have them be willing to have in independent party come by to give you an assessment of THEIR home. I think it is really sad that military families aren't allowed to have the same things that other Americans have because some people ruin it for them. There are many people who take good care of their homes and someone elses carpet because they have to live in it and on it and don't want to lose their deposits. You can also have the post vet or another vet in town evaluate their pets for health and aggressiveness. People who keep aggressive dogs, usually don't take good care of their property. Healthy indoor well-mannered/trained pets make better and less destructive pets. I do think a vet analysis of people's pets for temperment, manners, and/or aggression is a good way to start in the pet evaluating stage. I also agree about the 24 hour or less notice. Severe damage can not be cleaned up that fast. Just a note to some of you renters out there from a pet loving family who DOES CARE ABOUT YOUR HOME AND YOUR CARPET--ESPECIALLY IF I AM LIVING IN IT.

[Jodi]

Is it wise to buy a home before you PCS? I have heard a couple of stories where families have been re routed to another duty station mid move. Does this happen? I have a sister who is checking out houses for us and I trust her completely with choosing the best suitable housing for our family-but is wise to buy before we get there. We leave in May 08. Thanks!

[Jill]

Honestly, as a tenant who is currently dealing with a VERY overbearing landlord who gives us no respect for our own lives or privacy (she lives 10 minutes away), I am aghast to read some of the above comments. Call them and tell them you'll be there the next morning? Seriously people, while I am certainly mindful of your concern for your property, treating your tenants as second rate citizens is an inconceiveable poverty. I will NEVER rent from another owner-landlord, only property managers, because my experience has been like the above referenced landlord. No respect, no privacy. My family and I deserve more than that. We pay the rent on time, we take care of the premises. I'm in Hawaii, too, and 24 hours or less notice is illegal here. Not to mention unbelieveably rude.

[ann]

My husband thought he wasn't going to make the next promotion, so he purchased a home in an area we were stationed in for retirement. Six months later, he made the promotion and 4 weeks later, they transfered him to San Antonio, TX.

With pre-teen & teenage sons, we were not willing to move them from the school they were flourishing in and their friends (FIRST TIME EVER) and we couldn't sell our home anyway in the bloated market. (home was only 6 months old & the market started declining-leaving us upside down)

He is at the height of his career at a national level job and living in a dinky apartment on the rough side of San Antonio, while we have been left behind, going on 3 years now.
The first year was fine financially, but the second year cleaned out our buffer. We are heading into the third year, and living like paupers because there is no money by the 18th of each month.
Buying a home at the time we did was the worst decision of our marriage. I've lost 3 years with my husband, my sons lost time with their father and it's nothing but a struggle.