Rent Versus Buy: Why We Continue To Rent as a Military Family

Each and every time we move, Greg and I are faced with the decision to either rent or buy a home for our family to live in. Going on 17 years of this military adventure, we have chosen to rent (either privately or via base housing) every single time. (Yep, this current home is our 8th rental!) Quite obviously, renting has been the most comfortable decision for us and has made the most sense for our family so far. However, not every military family chooses to rent; and instead uses their housing allowance to invest in properties and build equity throughout their career. Today, I wanted to share why we continue to rent as a military family, and the pros and cons of this decision!

Basic Allowance for Housing

Before I jump into the rent vs. buy debate (which is a persistent conundrum for many military families), let me first explain about BAH: Basic Allowance for Housing. This is a “stipend,” on top of a service member’s base salary, to cover the cost of housing for themselves and their family. BAH changes depending on both rank and family size (married versus unmarried), as well as (and most importantly!) location. While living in San Diego, CA, our BAH was over $3000/month; yet when we lived in Kansas at the same rank and family size, our BAH was just over $1500. BAH is adjusted to reflect local rental prices and costs of living, and is essentially designed to level housing expenses for service members who live in varied locations across the globe.

I explain this facet of the military payment system because BAH is an important component of the rent vs. buy debate. Many, like Greg and I, use the designated BAH as the “goal post” when trying to find a rental home. Keeping our monthly rent close to or under BAH means we will not pay out-of-pocket for our housing. However, there are others who see BAH as “free money from the government” that can and should be used to build equity. So while we continue to pour this “stipend” down the rental drain (so to speak), other families choose to put that money toward owning properties, becoming landlords, and (potentially) increasing their income. Both of these situations have benefits and risks, especially in the context of our nomadic lifestyles.

The Pros and Cons of Renting a Home as a Military Family

Pros

• Lease Logistics – The time, research, background checks, on-hand money, and paperwork required to lease a home is significantly less than what is required to buy one. When you are trying to find a home quickly, from a distance, and/or when you re-locate quite often, this ease and speed is not just convenient but also sometimes necessary.
• Stress-Free Relocations (relatively, speaking) – Packing up and moving because of a military relocation (that might or might not be expected) doesn’t require finding new buyers/renters for your current home or incur costly fees. With legitimate military orders, you can get out of any lease, at any time, no questions asked.
• Less Home Maintenance Fees. As renters, you are usually responsible for utilities and repairs for any damages you incur. However, if there are larger maintenance costs that don’t involve you damaging the home (e.g., the air conditioner goes out, a bathroom leak, garage door malfunction, etc), it is most often the landlord’s responsibility (both financially and logistically) to fix it.
• Easier Home Maintenance. At least in our experience, we don’t have to schedule routine home maintenance like heating/cooling cleaning, landscaping, winterizing pipes, etc (the Landlord usually takes care of it). Additionally, if we do have a maintenance request, we just contact our landlord/property manager and they take on the logistics of finding, scheduling, and paying technicians.

Cons

• High Rental Payments – Most people maintain rental properties in order to make money. As such, rental payments are usually higher than what a mortgage on the same house would be. By renting, you will likely use a higher percentage of your BAH toward housing costs.
• No Equity – Like leasing a car, paying rent on a house doesn’t gain you anything financially. We pay a lot of money to live in a rental every year; but at the end of the day, we don’t own a lick of it and have made no long-term investment.
• Inability to Make Permanent Changes to a Home – This one is obviously a bit near and dear to my heart. While I do my very best to change as much as we can in our rentals, there are just some things that can’t be modified in “renter friendly” ways. We are stuck with ugly kitchen cabinets, bad floor plans, popcorn ceilings, and other “structural” situations.
• Harder to Find – In our experience, finding good rental homes is much more challenging than finding nice homes to buy. Not only do rental properties tend to be “bare bones” (because people don’t want to invest in rental homes that might get destroyed), but the amount of properties can also be quite low since we often live in areas with lots of military (and therefor, lots of renters).

The Pros and Cons of Buying a Home as a Military Family

Pros

• Build Equity – Quite obviously, the biggest benefit to buying a home is that you build equity. By using BAH to purchase a home instead of rent it, there is a likelihood you could walk away from the military with a significant financial asset.
• Create Income Property – As I mentioned above, rent prices tend to be higher than mortgage payments. So as long as you have a tenant who pays on time, there is significant money-making potential to being a landlord.
• Invest in the Home – By owning the home, not only is it possible to update things like floors, appliances, kitchens/baths, etc, but those improvements will likely increase the value of your property (both as a rental and for resale).
• Tax Breaks. By owning a home, you are eligible for greater tax relief.
• Market Availability – At least in our experience, there are always more homes available to buy than to rent. Being open to buying a property increases the chances of finding exactly what you want, where you want it.
• Easy to “Return” Home – By owning a home in a place that you could likely be re-stationed (like the Washington DC area), you’d have a home you could move back into. When I was growing up, the owners of the house down the street were literally there for three years, gone for three years, back for three years, gone again. However, this does require some fairly precise and lucky scheduling with both tenants and military assignments.

Cons

• Complicated Relocations – No matter which side of owning the property you are on (getting ready to buy or trying to sell), owning a house causes a military relocation (which most do every 1-3 years) to be more complicated. Buying a house is not as easy as singing a lease and writing a check to cover the security deposit; nor is selling or renting out a house upon your departure. Buying/selling a house requires more paperwork, time, and logistics than renting, and isn’t something people are typically up to doing every few years…especially in addition to handling their own relocation.
• Finding/Managing Tenants – If you choose not to sell your house because of your relocation, it means you are taking on a rental property. And while this can make great financial sense, it also means you need to find and manage tenants (or hire someone to do it for you).
  • This negative aspect of home ownership cannot be overstated. Because military families most often buy in military towns, they are most often renting to fellow military families. These tenants are subject to the same frequent and/or abrupt relocations; meaning you, the owner, are constantly having to find and manage new tenants. We have had many friends buy properties (because of the financial sense of it), only to sell them off rather quickly because of the constant turnover and/or stress of finding and managing tenants.
• Manage Property From Afar – Whether you incur the cost of hiring a property manager or oversee the property yourself, you will most likely have to do so from far away (maybe even overseas). Not being present in person (and possibly having to deal with time changes) can make dealing with maintenance requests and emergencies more difficult.

Why We Have Chosen to Rent Over and Over

Greg and I consider ourselves fairly financially savvy, but we have clearly continued to rent move after move, despite it not making the most financial sense.

Why? Although there are lots of reasons, the main is we just haven’t been able to justify the hassle of owning a property (e.g., finding tenants, paying for management, managing the property ourselves, etc), knowing we’d only live in the home for a few short years before primarily running it as an income property. Not only have we watched many friends struggle with managing properties from afar, but our lives already feel so full and busy. We’ve just never felt compelled to add that specific hassle to our lives…until lately!

Will We Ever Buy?

Every time we move, Greg and I have the “rent versus buy” discussion. So far, obviously, we’ve chosen to rent. And as far as the home(s) our family will live in for the remainder of Greg’s career, my hunch says we will continue to rent until we either a) get closer to retirement or b) really fall in love with a community.

That said, there are two situations that keep popping up lately, both of which have us thinking more about buying a house…

Rental Property

Moving here to Northern Virginia was a really interesting experience. We were shocked at how quickly any nice rental property was snatched up. If the house had hardwood floors and an updated kitchen, it was literally gone within hours. And that got us thinking. With so much military in this area (as well as Amazon HQ2 and other businesses), this area is a thriving and reliable rental market.

We don’t necessarily want to own a house here to live in ourselves, but have actually considered purchasing a home and turning it into the type of rental we’d want to rent…the type of rental that is snatched up within hours! Investment aside, how fun of a blog mega-series would that be: Creating the Ultimate Income Property Renters Will Love!

Vacation Property

The other situation that has our wheels turning is investing in some sort of vacation rental that our family could use regularly (but then we would rent out for the remainder of the year). Since we move around so much, we love the idea of having a consistent, special spot that we retreat to over and over as the kids grow up. However, finding a location that would be accessible no matter where Greg gets assigned could prove challenging. Though difficult, not impossible…so this is something we’ve started to consider more seriously as Greg’s career (slowly) starts to wind down.

All that said, we still have young kiddos and our life is still feels really, really full. So these are both just dreams and thoughts for now. But for the first time in Greg’s 16+ year career, we are somewhat, kinda, maybe, sorta open to buying a home. Or not. I’ll keep you posted, but don’t hold your breath! 😉

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Although we’ve stuck strictly with renting, we know many military families who do both…rent or buy…based on where they’re assigned, the housing market, and what’s right for their family at the time. If you’re part of a military family (or someone who relocates frequently), feel free to chime in below on your experiences in the “great rent vs. buy debate.” I love hearing how other families figure it out!