Buy or Rent? 25 Pros and Cons for Military Families to Consider
by PCSgrades Staff - November 3rd, 2022
When it's time for another PCS, there's inevitably one big question: should we buy or rent?
There are any number of reasons why renting might be better than buying, or vice versa. For military families, it might make more sense to buy at one duty station and then rent at the next. Will you live on base? Rent in the off-base community? Or is homeownership the best option for you?
There are no simple answers to the "buy or rent" question. But these 25 pros and cons can help you decide what's best for your military family.
Pros of buying a home
In my experience, buying a home is almost always a great investment, even for military families who move every few years. Owning a home gives your family a sense of stability and accomplishment that you just don't get with renting.
Plus, if you keep the property after you move, it can become an excellent long-term investment that will more than pay for itself in the long term.
-PCSgrades Affiliated Real Estate Agent
Purchasing the right home can be a great investment. With home prices continuing to rise in many housing markets nationwide, you could see a profit when you sell your home later.
Tax deductions such as mortgage interest and property taxes can greatly reduce your overall income tax burden if you itemize.
Being a homeowner can give you pride of ownership and a sense of stability. A sense of stability, as we know, feels rare in military life!
In some markets, your mortgage payment will be lower than rent on a similar property. If your mortgage is less than your BAH, you could pocket hundreds of dollars a month.
You can decorate however you want! Goodbye, white walls! Hello, color!
Anyone can stay with you at any time. No dealing with visitor passed and chaperoning your guests around base. Does your Mom or sister want to come for an extended stay during a deployment or after a PCS? Not a problem.
You can do (almost) whatever you want: host a late-night party, plant a garden, or knock a wall down! It's YOUR home to do with as you wish!
There are no security or pet deposits when you buy a home.
You can rent out the home after your next PCS. Rental properties can provide a steady source of income, which can partially or totally offset your mortgage, taxes, and insurance payments.
You can earn cash back at closing by partnering with PCSgrades-affiliated real estate agents. Learn more about the cash-back program here.
Pros of renting a home
Choosing to rent gives you flexibility. You can move without penalty each time your lease ends. And if you need to move sooner due to military orders, a military clause in your lease can release you from your rental obligations.
There is minimal responsibility with renting. Your landlord or property management company will take care of most of the repairs and maintenance.
There is financial predictability when renting. You know exactly how much you’re going to spend on housing each month. Any increases in rent require notice and usually do not occur until the lease runs out.
Cons of buying a home
You have no control over when military orders arrive. You might not be able to sell when you need to, or the housing market in your area could be on a downswing. Although you are building equity, it doesn’t always equate to automatic profit. Your home could be underwater, meaning your outstanding loan is more than what the house is currently worth.
If you are able to sell when orders arrive, there are significant transaction costs involved, such as the commissions for the buyers and the listing agent. A potential buyer may ask that you pay part of the points or closing costs. You can offset some of these closing costs when you get cash back at closing. Learn more here!
Once you own a home, it is a lot harder and much more expensive to change your mind. If you find commute times from your neighborhood are not manageable, getting out of a lease is a lot cheaper than selling your property.
The overall cost of homeownership tends to be higher even if the mortgage payment is lower than comparable monthly rent. The cost of repairs, Homeowner’s Association (HOA) dues, property taxes, and more all come out of your pocket as the homeowner.
The financial obligations of a house can fluctuate wildly from month to month. One month you may have just the mortgage and utilities to pay. Another month, in addition to the mortgage and utilities, you may need to hire a plumber or electrician or purchase a new appliance.
Homeownership is great, but it's not right for everyone. I believe in listening to my clients, understanding their specific life and financial cirsumstances, and then helping them decide whether buying a home is the right decision for them.
-PCSgrades Affiliated Real Estate Agent
Cons of renting a home
If your landlord decides to sell the property after your one-year lease is up, you might have to move unexpectedly before your two or three-year tour is complete. There are other unknowns, such as increases in rent or an unbearable neighbor across the hall.
Another downside to renting is that you are not building equity with monthly rent payments. Your rent is building your landlord's wealth - not your own.
Reverse Military Clauses are becoming popular for military landlords. If you rent a home owned by a military family, you could find yourself moving out when the owners return to the area.
Renters are not eligible for mortgage interest or tax deductions.
Pet and security deposits are the norm for many rentals. Some pet deposits are non-refundable.
You cannot always decorate how you want. You may not be able to paint the walls or plant rose bushes in the front yard. And if your landlord does allow you to paint, you may be obligated to paint it back to the original colors when you leave, all at your own expense.
You may have restrictions on family members staying for an extended period if they are not listed on the lease. This is especially important for military spouses who give birth while their service member is deployed. Having Mom stay with you during this time may be in violation of your lease.
While your landlord is supposed to take care of all the repairs and maintenance, the timing isn't always desirable. Many renters complain that the landlord “takes forever” to repair anything. Landlords are also sometimes accused of being cheap, going with the lowest possible repair or replacement cost. And unfortunately, we all know that you often get what you pay for.
The decision to buy or rent
Ultimately, the decision to buy or rent will depend on your personal circumstances. A lot depends on your financial situation at the time, where you are in your military career, and the housing market where you are looking to purchase.
Carefully consider these pros and cons when deciding whether renting or owning at this moment is best for you and your family.
If you want to know more about a specific housing market or talk to a REALTOR or mortgage lender familiar with military life, visit the PCSgrades homepage. Our network of real estate professionals can help you make the best decision for your military family.