Yes. In fact most of the time with three year orders military members should rent instead of buy.
Ok-Republic-8098 on
I would say the majority of time in present day it’s worth renting over buying. After 5+ years you start to reach the break even point
Renting is the max you pay each month
A mortgage payment is the minimum you pay each month. Interest, maintenance, taxes, insurance are all sunk costs. A roof is 14-30k, a window is $500, air conditioner is 13k, etc. if one big ticket item breaks, your spending the equivalent of months of rent
PickleWineBrine on
Yes. Like the other guy said it’s usually better to rent.
Unless you know that you’ll be homesteading at a base for 5 years then the math rarely works in your favor.
tigerfries22 on
The calculus is certainly changing. When interest rates were super low it was advantageous to buy because margins for follow on renting were really good and even in a 3 year orders window you were likely to make out selling higher than what you paid.
Make sure you understand the market you’re living in. Whats the turnover rate, availability of rentals in the price range you seek, and types of rentals (airbnb/seasonal short term vs long term).
jon110334 on
It took me six years at one base to “break even” when I sold my house to PCS.
Buying and selling a house is expensive.
The typical sale loses about 8% of the home’s value to closing costs.
The typical purchase has around 5% closing costs.
Typically, the cost of ownership is around 5% and the cost to rent is typically around 7%.
That’s why you typically see 4-6 year “break even” points.
And that’s it the house is paid off.
Add a 7% home loan on 100% of the home’s value and the cost of ownership is closer to 9%.
You’d need the housing market to climb tremendously to make those numbers add up… Or own for a really long time.
BlueCactusChili on
With renting, you’re buying flexibility and convenience. If the AC stops working, you call up the landlord and they’ll take care of it. As a homeowner, you’d be paying for the fix out of pocket.
There are pros and cons to each.
pamar456 on
Not for me. I’ll be living on post and rather throw the extra money into tsp and investment accounts
Shot_Thanks_5523 on
I bought every place I was stationed (all less than 3 years) and made money each time. Always a potential to lose money or break even but I always got lucky.
Hardanimalcracker on
Today, renting is almost always cheaper than buying sometimes by a very large margin (my area comparable rents are about 30% cheaper than mortgage and that doesn’t even include all the other homeowner costs). House prices and interest rates are quite high.
With property taxes, insurance costs, maintenance costs skyrocketing – much better to be a renter in almost all circumstances in the military. Unless you can buy house cash, get a good deal / price, and plan to stay or own the home over a long period. If those 3 things are true better to buy.
HistoricalAvocado364 on
The biggest thing I see and hear people complain about is the prices… don’t worry about the price of the house, see what you can afford(mortgage, insurance , property taxes, electric, water, gas) and keep everything under you bah. Don’t buy out of your league. Go for the house that’s needs repairs, small things here and there or buy houses that are fixer uppers. Even if you have no knowledge on what you’re doing a simple YouTube video will give you an idea, still worried hire a handy man to assist. In Kansas I bought at 4.75% made small upgrades by doing it myself, spent maybe 5k in 3 years upgrading and sold and made over 80k bought another house in TN now at 6.75% and still stayed under bah, will be refinancing whenever rates come down and that’s more money into upgrades…
10 Comments
Yes. In fact most of the time with three year orders military members should rent instead of buy.
I would say the majority of time in present day it’s worth renting over buying. After 5+ years you start to reach the break even point
Renting is the max you pay each month
A mortgage payment is the minimum you pay each month. Interest, maintenance, taxes, insurance are all sunk costs. A roof is 14-30k, a window is $500, air conditioner is 13k, etc. if one big ticket item breaks, your spending the equivalent of months of rent
Yes. Like the other guy said it’s usually better to rent.
Unless you know that you’ll be homesteading at a base for 5 years then the math rarely works in your favor.
The calculus is certainly changing. When interest rates were super low it was advantageous to buy because margins for follow on renting were really good and even in a 3 year orders window you were likely to make out selling higher than what you paid.
Make sure you understand the market you’re living in. Whats the turnover rate, availability of rentals in the price range you seek, and types of rentals (airbnb/seasonal short term vs long term).
It took me six years at one base to “break even” when I sold my house to PCS.
Buying and selling a house is expensive.
The typical sale loses about 8% of the home’s value to closing costs.
The typical purchase has around 5% closing costs.
Typically, the cost of ownership is around 5% and the cost to rent is typically around 7%.
That’s why you typically see 4-6 year “break even” points.
And that’s it the house is paid off.
Add a 7% home loan on 100% of the home’s value and the cost of ownership is closer to 9%.
You’d need the housing market to climb tremendously to make those numbers add up… Or own for a really long time.
With renting, you’re buying flexibility and convenience. If the AC stops working, you call up the landlord and they’ll take care of it. As a homeowner, you’d be paying for the fix out of pocket.
There are pros and cons to each.
Not for me. I’ll be living on post and rather throw the extra money into tsp and investment accounts
I bought every place I was stationed (all less than 3 years) and made money each time. Always a potential to lose money or break even but I always got lucky.
Today, renting is almost always cheaper than buying sometimes by a very large margin (my area comparable rents are about 30% cheaper than mortgage and that doesn’t even include all the other homeowner costs). House prices and interest rates are quite high.
With property taxes, insurance costs, maintenance costs skyrocketing – much better to be a renter in almost all circumstances in the military. Unless you can buy house cash, get a good deal / price, and plan to stay or own the home over a long period. If those 3 things are true better to buy.
The biggest thing I see and hear people complain about is the prices… don’t worry about the price of the house, see what you can afford(mortgage, insurance , property taxes, electric, water, gas) and keep everything under you bah. Don’t buy out of your league. Go for the house that’s needs repairs, small things here and there or buy houses that are fixer uppers. Even if you have no knowledge on what you’re doing a simple YouTube video will give you an idea, still worried hire a handy man to assist. In Kansas I bought at 4.75% made small upgrades by doing it myself, spent maybe 5k in 3 years upgrading and sold and made over 80k bought another house in TN now at 6.75% and still stayed under bah, will be refinancing whenever rates come down and that’s more money into upgrades…