Military Rent vs Buy

If you are asking yourself that basic question after getting orders: Am I going to rent at my next location or am I going to buy? This is Felicia Rexford here. I am a realtor in Las Vegas, Nevada. I'm one of the top producing agents in town. I'm also a veteran who specializes in VA.




So I hope I'm able to actually answer this for you. The biggest issue that people have is rent versus buy. And I think the one thing that holds everybody back is the time that you may be at that duty station. So here in Las Vegas, we've got two large Air Force bases, Nellis Air Force Base and Creech Air Force Base. I would say, almost on a daily basis, I am getting a phone call with somebody receiving orders to Nellis or Creech, and they are asking me this exact same question. Do I rent or do I buy? I may be there for only two years.


So here's my response. First and foremost, if you're an active duty service member, you are being granted what's called a BAH; basic allowance for housing. You are being given money to go towards housing that's on top of your regular pay. So let's just use some average monetary examples here. I know that is always going to depend on your rank and how many years in service, but let's just use a middle of the ground example. You are being granted $1500 a month on top of your normal pay.


Do you rent or do you buy? The military is going to give you $1500 a month to go towards a mortgage payment of some kind. You choose to just give it to somebody else to pay their mortgage; i.e. a landlord. Here's $1500 from the government. I’ll go ahead and continue paying your mortgage. Why? I think people think it's a safe option to rent. I don't want to fix anything if it breaks, etc., etc..


I would say this is the best opportunity to learn to pay yourself. Don't pay somebody else's mortgage balance off. Pay yourself. Take that $1500 as a $1500 a month opportunity to go towards your own mortgage. Oh yeah, by the way, you have a VA loan. So if you have a VA loan that you haven't used yet, there's a very good chance that you could purchase a house with little to no money down utilizing some of the lowest interest rates that we've ever seen in history to purchase a house, and on top of that why not utilize your government to pay down your mortgage.


Now, coming back full circle to your first initial issue, I may get orders in two to four years. What do I do with this house? Well, in two to four years, what I see, is you having an option. If you rent, you never have the option of what you want to do. If you buy, you have two options, one being to sell. If the market has done well and you have equity in the house, you may want to sell. I am selling homes that people have been in for two to three years left and right here in Las Vegas. And because our market is moving so quickly, they're making money. So you have the opportunity to potentially sell and make some money and put some money in the bank. That's awesome. That's an opportunity that you never would have had if you handed it over to a landlord. Right? So selling, making money, that's great.


Or you can start with the very first property in your portfolio. Let's say that you've got a little bit of an investment bug in you and you want to be a real estate investor or you want some kind of portfolio to hand down to your children. At some point you're going to retire from the military. You may be looking at another life of service somewhere, and you may want some residual income via the form of a rental. That may be an opportunity to actually hold onto a property and rent it, and because you were stationed in Las Vegas, Nevada, I bet other people will be stationed around that same area who may want to rent. So you may even find yourself a military renter. Am I speaking from experience here, people? Yes, I am. I bought multiple houses here in Las Vegas that I've held onto and I bought them with my VA loan. I’ve rented to people and I’ve bought another house. I've rented and at some point and I've decided to sell off a few of them and make some money.


So here's my personal example. My very first purchase was my home. I was actually still on active duty up at Creech Air Force Base. After I purchased that home, my husband and I could easily pay the mortgage with just my badge and his income. That wasn't a problem. The fun part comes when you learn the ability to house hack. Now, house hack is, I would say, a newer term in real estate. It's really come about with the BiggerPockets brand, and Turner is a huge promoter of house hacking, and everybody kind of on the real estate basis will know what this is. Back in my day, all I knew was that it was renting out my rooms.


So we purchased our first house. We could easily cover the mortgage, but to give ourselves a kind of foot up, we rented out our rooms to other people. We were “house hacking” out our bedrooms to other military members. So I actually bought a three bedroom, two bath. That was my first house and I house hacked the two other bedrooms, and I rented those both out for the equivalent total of my mortgage. We did this for the first seven years of our marriage. Seven years of other people helping to assist in paying your principal balance and your mortgage down. I was the homeowner because I used my VA loan and my badge, but on top of that, I now rented out my rooms. I kind of subleased them out. They helped pay down my mortgage.


As years accumulated, I continued renting out those properties and then I sold them down the line for huge profits. One of the houses that I'm talking about, I sold for $100,000 profit, and the other house actually made it all the way through the real estate crash. I purchased it in 2007. I held on to it, rented it through the real estate crash and still sold it for a profit about three years ago for about $50,000.


If I never would have used my bank or my VA loan to purchase, and rented instead, I would have never given myself those opportunities to further my financial success, in this case, house hacking, paying down my principal, holding on to an asset and selling it at a time that made me a profit. Renting just never gives you those options.


If you're reading this, then you're probably either an active duty service member or possibly a retired veteran. Either way, you have a VA loan. So what are some of the benefits of a VA loan. Well, 100% financing would definitely be one of them. When I go to buy an investment property right now using a conventional loan, an investment property, I have to put down 25% of whatever that purchase price is.That's before closing costs. If you, the VA buyer, are purchasing a home, you don't have to put down anything. And sometimes the seller or builder is even able to assist you with those closing costs. There are many times that I'm able to get a BAH purchaser into a home with little down, and when I say little, I'm talking about three to $5,000 or no money out of pocket.


So with no money out of pocket purchasing a home, you now own an asset that, if you kind of rewind and relook at what I just said a second ago, you can house hack. You own an asset. You can now house hack it. You can have somebody else pay your mortgage. And again, down the line, you have options. It’s all about having options. You have the option to hold on to this asset and sell it for a profit or hold on to this asset and rent it down the line till you're ready to sell later. So the options in real estate are beautiful. To start with a VA loan with zero money out of pocket is just mind boggling and then, on top of that, to use your house hack to pay your mortgage every month….. Beautiful!


To me, it's truly a no brainer. Clearly, the benefits of using your VA loan and purchasing a home far outweigh the negatives of renting and paying somebody else's mortgage off. I am an Air Force veteran here in Las Vegas, Nevada, a realtor and investor. I hope that you're loving these topics that I'm bringing to you because I love bringing them to you.


If you like any of the information that I went over today, please subscribe, like, and comment. This is a two way lens here. I want to keep the communication going and if you found me useful, I'd really appreciate it. Stay tuned for a lot more videos and a lot more information. Felicia Rexford here signing out





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