5 Reasons Military Families Avoid Real Estate

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We have all heard the stories of bad real estate experiences. The house that wouldn’t sell. The tenants who destroyed the carpet and put holes in the walls.Thousands of dollars lost, and a mountain of stress on top of an already stressful lifestyle.

I have had many conversations over the past ten years with other Army spouses about rentals, buying and selling homes, and there was one thing in common: a bad experience. Some people have sworn to never buy again, and others who were too scared to rent were sitting on an opportunity and did not even know it.

I have been thinking, why do so many military families have such bad luck with real estate? What scares them about real estate? For those who bought homes, why were they anxious to get rid of a profitable investment? Why?

I don’t believe in bad luck, instead, I’ve come to the conclusion that there are five main reasons military families avoid real estate.

5 Reasons Military Families Avoid Real Estate

Fear.

As military families fear is common in our lives. Moving somewhere you don’t want to go? Deployments? Injuries? Worse? Some of the fear is real and some of it perceived.

We tend to fear things that we do not have experience with and then avoid the things that we fear. This is often how people react to buying real estate and becoming a landlord. They feel like there are too many things out of their control, and so they should fear it. What if something breaks? What if someone trashes my house? What if my tenants stop paying rent?

Fortunately we can remove a majority of these fears with both education and experience. Think about the fears you have conquered. When that second deployment comes around, you know what to expect and are less fearful. When its time to pack up for the 4th PCS move, you know exactly how to plan, prepare, and budget for it. It is no different with investing in real estate.

Perspective.

Hindsight is 20/20. But why? Because we are able to look at the situation objectively when we are passed the crisis instead of in the middle of it.

If you are trying to sell your house and no one is showing interest after weeks (or even months) on the market, it’s natural to have a knee jerk reaction. You feel like you are hemorrhaging money. STOP THE BLEEDING! Sell fast and get out of this situation.

But what if you rented it instead and the rent you received covered your all or a majority of your expenses? Wouldn’t that have also solved the hemorrhaging money problem? Unfortunately, when the military says its time to go … well … there’s not much negotiating. If you could find options, other than selling or foreclosing, you may have a better story to tell. A story, instead, about becoming a landlord and letting someone else pay your mortgage while you build equity.

Foresight

It’s hard to look 20 and 30 years down the road when you know there will be many moves along the way. The military life forces you to live in the present. Our civilian counterparts are different from us, they buy a home and stay there for many, many years, maybe they buy another. When it comes time to retire, they usually have a house that is close to paid off.  Woo Hoo! No mortgage payments. That takes a huge load off of your finances when its time to retire.

But military families never purchase a home and end a 20-plus year career with no equity. They now have the burden of buying their retirement home without any equity and a 30 year mortgage puts a heavy load on your retirement lifestyle.

Start early — your first house does not need to be big or expensive. It could be a condominium or a small two bedroom cottage. Remember, this is not your retirement home, it’s the home that will build equity so you can build or buy your retirement home when that time comes.

Education 

Just because a Realtor or lender says it is a good idea, doesn’t always make it true. Proper education prepares military families to make the right choice for their personal enjoyment and long-term investment. There is so much more to buying a house than picking out one you like.

Understanding the real estate market and what drives mortgage rates, loan products available to you, appreciation (and depreciation), researching a location, finding the right house (which will become a good rental) and more sound like a daunting task.

How do you eat an elephant? One bite at a time! That’s how you learn about real estate, little topics at a time and before you know it you have a greater understanding of how it all works together. Pick up a book, search the web, you will find plenty of information on purchasing homes and renting them out.

Preparation 

Start saving early — it may take a couple years to grow your nest egg. That is okay. Once you’re ready financially you will be able to handle any storms that come your way with confidence. While you’re saving, keep focused by learning about real estate. Familiarize yourself with the benefits and requirements of the VA loan. If you take advantage of this military benefit, your nest egg can stay put and continue to grow until you absolutely need it.

Investing in real estate and managing your rentals can make a hugely positive difference in your retirement savings. Use the “move every two years military plan” to your advantage. Let go of your fears, try something new. Change the perception of we are “stuck” with this real estate to a foresight of we will “build equity” with this real estate. Educate yourself, be the next person sharing the “positive” real estate story. Prepare and plan to make it happen and give yourself options.

Where do you stand on real estate in the military?

Amy Shick is a co-founder of the Military Property Project. Military Property Project (www.militarypropertyproject.com) is a resource for new and current investors in real estate. Amy lives at Ft Wainwright, AK with her husband, three kiddos, and a dog. While not spreading the word about her project, she is trying to learn how to snowboard in her late thirties, ouch.

 

Photo courtesy of Charleston’s TheDigital under the Creative Commons license.

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  • Amber

    We have been in both sides of this. Our first rental house was because the market crashes during the 2 years we lived in our home and then surprise orders showed up. We rented that out for 5 years before selling, and we definitely experienced some horror stories and stress. I also learned a lot along the way, and we were able to gain equity while collecting enough rent to cover the mortgage until we could afford to sell. We bought our second house with the intention of renting it out when we moved. This intention affected our buying and updating decisions, and we are much happier for it. We are now collecting enough rent for the mortgage and some extra for repairs. And since we intentionally bought with renting in mind, we are in a desirable location close to base and it is low maintenance. It has been very low stress so far, the complete opposite of our first house. I would encourage people to consider renting out, but it certainly helps to buy your house with this intention, as it is much easier to rent out if you have a great location and it will be easier to keep the house in good repair if it is low maintenance.

  • Kat

    If you have a VA loan you can not rent your home out. At least that’s what our contract says. Keep that in mind.

  • jessie

    You can rent out your home with a va loan. You cannot buy an investnent home With a VA loan.