If you are in the military or another industry that moves often you probably have this question, “Is it worth buying a house if you move every two years?” As a military spouse whose husband is active duty, and as someone who has moved four times in six years, my answer is it depends.
We have bought seven houses in four years. Four of the houses have primary residence and the other three were bought as rentals from day one. We didn’t buy at every duty station because for us it didn’t make sense. At our first two duty stations, we were too poor to handle buying a house, therefore it didn’t make sense.
The short answer is it depends on your own situations and everyone will give you a different answer.
The long answer is figuring out your situation based on many different factors.
Is Buying a House a Smart Choice for You?
- What is the climate of your current market?
Is it cheaper to rent or buy? Right now we can put 0% (VA) to 5% (Conventional) down and have our mortgage be considerably less than rent. As you can see in Case Study #4 we saved tons of money in buying a house just by the cash savings. This did not even count the $50,000 of appreciation we have seen. Someday we will be tenants again since it will cost us considerably more to buy than to rent, since we never buy a house that we could not instantly rent out for more than our mortgage.
- Do you have the funds to cover house repairs?
While we have saved thousands of dollars by owning instead of renting, our houses have also costed us thousands of dollars and tons of grief. While we’ve done many of the repairs ourselves such as our most recent shower project, the installation of a new AC system was hired out.
- Are you okay with a lot of debt?
We personally are okay with good debt. We put as little down as possible on the houses, because in our opinion, the goal is to have the tenant pay off the house instead of us.
- What is your exit strategy?
What is your exit strategy (landlording or selling?) This is very important to think about since houses are bought on 30-year mortgages typically. Our exit strategy for buying a house has always been landlording since that is the safest in our opinion. Even in the recession when people couldn’t sell, they could rent. On the other hand, dealing with tenants certainly has its moments, so you definitely need to be prepared to deal with good and bad tenants. If you are going to sell the house, are you willing to take a loss if you cannot sell it right away?
- This is a marathon, not a sprint.
Owning real estate can have amazing financial benefits. The key, though, is nothing comes easy when buying a house. Whether you are dealing with a busted water heater during the most stressful time of your life, or a tenant who is being a problem child, real estate will put you through your paces. Therefore, it is important that you are in for the long haul.
At the end of the day, no one can tell you if buying a house make sense for the short term — as it really depends on your goals. While we have only lived in a home for a short period, it has been a huge financial blessing because it has allowed us to build up investment accounts. On the other hand, if you do not want to handle your house for the long term, then buying a house would make less sense since most come with a 30-year commitment.
I will end with this comment — while everyone thought we were nuts when we first starting buying houses, over time the houses have added up and are now making us almost $2,000 a month in cash flow (see Oct income report). So for us, buying short-term homes has been a huge blessing. On the other hand, we buy every house with the expectation that we will rent it, not based on appreciation to sell the house.
What has been your experience? Do you buy a house when you will only be there for a short amount of time?2