Deciding to Rent or Buy a Home During a PCS Move
The unique nature of your occupation means you will most likely be relocating every 3 to 4 years. That means uprooting the family and going to your next duty location, wherever around the world that may be. If you are being stationed here in the U.S., one of the first things you will need to determine is if it makes more sense to rent or buy a home during your PCS move.
As a retired military spouse, I saw my share of relocations. In fact, between local moves (into/out of base housing from/to a house or apartment), renting, buying, and living on-base, we moved over 20 times in 20 years. Trust me, I understand what you will be going through!
This PCS Move guide will help you decide which option is best for you. It provides tips to help you make that choice, as well as general Permanent Change of Station advice from someone who has walked in your shoes.
Whether you are moving to Luke AFB in AZ, Robins AFB in Warner Robins GA, or someplace else, below are several advantages and disadvantages of both renting and buying a home at your new duty location. For good measure, the pros and cons of living in base housing are included too.
How Long Will You Be Staying?
Obviously this is easier to determine if you are on a special duty or program that has a pre-determined minimum number of years (such as being an instructor). Unless you are adamant you want to try and move quickly, your chances of staying put for awhile are pretty good. Knowing (or not) this information will have a direct impact on whether or not you feel comfortable purchasing a house or would prefer to rent.
Did you know…according to MilitaryTimes, on average, 6K military members move each week.
You do not gain any equity by renting but you also are not under the pressure of having to sell and make a profit either. On the other hand, potentially building equity in your own place (where you can do what you want to the property) has appeal for many military members and their families and is often a top consideration during a PCS move.
VA Loan Eligibility
Unless you have already used up your VA eligibility, you can buy a home with no money down. Consider that one of the perks of serving your country. That can sway many who are on the fence because their out of pocket expenses are minimal, which means they can keep money they have in savings for other things.
While this is an important consideration, it should not be your only reason for deciding for or against buying or renting. It should be included as a decision point which helps spur family dialogue and brings you to a clear-cut decision point that makes the most sense for your situation.
With those pre-considerations under advisement, let’s peel it back and discuss the advantages and disadvantages of buying versus renting a home.
Pros of Buying a Home
Does the thought of owning your own home excite or terrify you? Maybe both? It can be a very rewarding experience, regardless if it is your first, fourth, or last PCS. Below are several benefits of buying a home during a PCS move to help convince you to become a homeowner.
This is one of the biggest monetary reasons many active duty members purchase a home. The ability to deduct mortgage interest and property tax from your taxable income can make a big difference in what you owe or get as a refund during tax season. It is a serious consideration you need to adequately explore.
Because you will most likely receive a larger tax break by itemizing your taxes over taking the standard deduction, you have the opportunity to claim a wide array of things you otherwise might not have been able to claim (such as moving expenses or a home office).
If you put money down, paid less than market value, or experience an increase in property value, you could have equity in the home. Those are funds you can borrow against or get a line of credit for. For instance, If your home is valued at $200K and you owe $175K, you have $25K equity available.
You can also help generate equity quicker by renting out a room, pool house, basement, or other space in or on your property. The thought of having someone else help make your mortgage payment or just to assist with generating passive income are key things you might want to consider.
Having equity means you can put in a pool, renovate your kitchen, or use the money for whatever else tickles your fancy. For many, this can be a big selling point towards joining the ranks of those who call themselves homeowners.
Sense of Belonging
Perhaps it is having skin in the game but there is something about owning your home that provides a unique sense of belonging. Whether it is pride in living in a local subdivision, community, or county, you have a vested interest in the area as well as an opportunity to grow roots.
Obviously, anyone who lives in the area can do the same, regardless of their homeownership status. However, no one has more at stake than a homeowner which typically means many will do everything in their power to fit in, join in, and take pride in where they live.
Freedom to Make Changes
Unless you live in a strict HOA community that does not allow changes without prior approval, you have the opportunity to make your house into whatever type of home you desire. You can paint the property, put in a recreation space, change room functionality, and more.
Of course, check with the HOA before buying to ensure you can make additions or changes to the property as you like. While many HOAs are fine with moderate changes, it is still a smart move to know what you can and cannot do before you sign on the dotted line.
Cons of Buying a Home
Buying a home while on active duty does not appeal to some military members. If you are in this category, do not fret as you have other options worth considering. Here are several things to take into account before you buy a home at your next duty location.
Periodic PCS Moves
Being in the military can be incredibly rewarding but it can also take a toll with the frequent moves, sometimes as often as every couple of years. The unintended threat of having to make a PCS move in a few years can turn off some active duty members from the thought of having to try and sell a home after owning it for such a short period. Weigh your options and if you are not comfortable assuming some risk, then buying a home might not be the right option for your family.
In some cases, you may be upside down on the mortgage (owe more than the home is valued at) which means you could end up owing money during the closing. This is not a good option, especially with having to move to another locale and deal with the costs of setting up home there. It could also take awhile to sell the home which could mean you will be trying to run two households without an increase in income.
No one wants to lose money on a home. However, without the property appreciating in value, accumulating equity, or having a buyer who asks for no closing cost assistance or home repairs and is willing to pay more than asking price, you may not be in a good financial state when unexpected military orders arrive.
You are Responsible for Maintenance and Upkeep
If you are not handy or do not have extra cash to maintain a home, it may not be the best move to purchase a property. Even if you are considering buying a new construction home, there are going to be occasional upkeep costs as well as periodic maintenance you will be responsible for. Depending on your level of involvement the costs may be more than you are willing to part with.
You will also need to take into account the need to maintain the outside of the property. The costs of buying a lawnmower and associated accessories, as well as seasonal items like mulch, flowers, or even decorations can be an unwanted expense if you are budget conscious. Even if you decide to hire someone to take care of outside upkeep, there is still a cost associated with those tasks that you might not want to take on.
Pros of Renting a House
While my husband was on active duty, we rented several times. Renting was often the right choice for us as it gave us plenty of flexibility. Here are several reasons why renting a house can be a smart move.
Low Start-Up Costs
This is definitely a consideration all military singles/families should take into account when weighing their buy vs rent options. Often times paying a months rent in advance, providing a nominal security deposit, and paying to have utilities switched on are all that is required. That is often significantly less than what your upfront costs would be if you decided to purchase a home.
If you go through a relocation company there will most likely be an application fee as well. If you have pets, a pet fee may also be levied. The cost may be dependent on the number and type of pets you have. When in doubt, read through the contract thoroughly to ensure you understand what you are agreeing to pay, how the costs are levied, what your options are, and when/if you can recoup those fees.
Relocation is Easy
If you get a short notice assignment, invoking your military clause (ensure you have one in the contract!) and getting out of the lease is relatively simple. We had to use this option once when we received orders to Holland and it saved us a small fortune. If you have ever utilized it to cancel a lease, you know exactly what I mean.
If you are moving locally, you may have to work with the landlord on a release. Each individual situation is different but they range from 30 days notice to having to pay the entire lease amount to be released. When in doubt, take a copy of any official documentation to the base legal office to ensure there are no issues or concerns.
Lots of Options
Renting can often provide the ability to afford a home you could not otherwise afford to buy. In some cases it is cheaper to rent without the overarching concerns that come with owning a house. Other considerations include:
- You can decide if the community or subdivision is right for you before making a future home purchase determination.
- Getting into a particular neighborhood and/or school district is often easier.
- In some circumstances you can get a larger property or more land.
Cons of Renting a House
Renting is not for everyone! We did it several times while my husband was on active duty and had both good and bad experiences. If you do not like the idea of making someone else’s mortgage payment, read on to find out why renting a home may not be the best solution for you.
Loss of Potential Equity
You are helping someone pay down their mortgage instead of building equity in your own place. If you stay in the home for several years, the potential loss of equity you may have enjoyed can be disheartening when you finally decide to move or get PCS orders.
You also will need to get approval from the landlord/owner before making any changes to the property. In some instances they may turn down your request. If you still decide to go forward with changes you may be liable to put the property back to its original state before you are released from the rental agreement. Depending on the changes made, the costs to correct could be very high.
Dealing with Landlords
Some renters have a great experience and even become friends with their landlords or property managers. Others do not fare so well. If there is a dispute, the property manager will almost certainly side with the owner, who is paying them to look after the home. Remember that when you are seeking compensation or some other action.
Not all landlords are proactive which means a broken air-conditioning unit could stay that way for several days. Other appliances or issues could take even longer to resolve. You may even find many are way more critical of little issues when you move out as opposed to when you moved in which means the loss of some or all of your security deposit.
Advantages of Living in Base Housing
Living on-base has appeal to many military families. Whether it is for monetarily, safety reasons, or something else, here are several reasons why you might want to consider living on-base if it becomes an option for you.
You can exponentially decrease your commute time if you live on-base. What may have taken 30-45 minutes while living off-base can be shortened 90% or more. You might even be able to walk or ride a bike to/from work which can help improve your physical fitness. Depending on your current commute, your savings could be $75 a month or more.
Add in the time it takes to get to the hospital/clinic, child care, shopping, and other military unique choices, and there are several benefits of living on-base that are worth considering. Is it right for you?
More Money in Your Pocket
Sure, you have to give up your basic allowance for housing (BAH) to live on the base but often times if you are living downtown you are out-of-pocket to make up for what your BAH will not cover.
Another obvious savings by living on-base is the savings you recoup from wear/tear on your vehicle. Your tires will last longer and you will not have to be concerned about future breakdowns. You will also save quite a bit of cash over the course of the year because you will not need to fill up the gas tank that often.
Sense of Community
It is difficult to explain if you have never lived on-base, but in every situation I have personally encountered, there is a united sense of community. Maybe it is because of the unique nature of military life or perhaps it is like minded people with similar goals but there has always been a closeness when I have lived on-base.
In many cases, the military members are similar ranks, which can help build camaraderie. Often the kids are the same age and going to the same schools so they study and play together. Whatever the reasons, there is an opportunity for an increased sense of community if you decide living on-base is what you want for your family.
There is no location that is completely void of concerns but living on-base definitely removes some of the safety/security risks associated with moving to a new location. Frequent patrols, less overall crime, and controlled access at many locations all equate to living in a safer and more secure environment. For many this is a major reason why they ultimately decide to move into base housing.
Disadvantages of Living in Base Housing
Living in base housing is not for everyone. I have done it a few times and the experiences were very good. I have known others who were miserable. The tips below will help you determine if living in base housing is something you want to explore at your next base.
In many cases, the homes available on-base are not comparable in square footage size to what you might have available off-base. Just using my own experiences, they are about 30% smaller. While that may not be an issue for some, those who want the extra space or larger rooms may feel hemmed in.
I know there has been a push in recent years to upgrade housing units but some bases still have a considerable number of older properties. Sometimes that includes stairwell living as opposed to having a stand-alone house. Check with your local housing office and tour the available property types to determine suitability for your family needs.
Depending on your rank and the size/type of housing you qualify for, you may find you have a lengthy wait before you are offered a house. Finding out availability upfront will help you form a plan of attack before you arrive. If you know the wait will be 6-9 months, you can decide to temporarily live downtown or just decide living on-base is not something you will go after, even when a unit opens up.
Your choices are limited. If your base has its own schools, that is where your children will attend if you decide to put them in public schools. If there are no schools on-base, your children will attend the schools the base is zoned for. If there is a specific school or district you want your kids to be part of, living on-base might not be the solution for you.
If you decide to send your children to private schools, the cost for schooling is your responsibility. I did this during elementary school for my kids and the costs were very high. I do not regret it but it may not be an option for some depending on their budget. If you do decide to go this route, you will have to get your kids to/from school each day. Carpooling can help!
Final PCS Move Advice
The right choice for renting, buying, or living on-base is the one that makes the most sense to you. Make a list of the things that are important to you and your family and pick the type of housing that is the closest fit to meeting your needs and desires. Other factors such as availability, interest rates, schools, etc. will all have an impact on which option you ultimately choose.
While a military move can be a daunting process, with a little planning you can make it a positive experience for you and your family. Whatever you decide housing wise during your PCS move, make the most of your upcoming assignment, and your experiences will be positive ones. Happy house hunting! ~Anita~
Additional PCS Resources
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