post written by MsKiki
According to an article on MSN Money July 29, 2011 the new “American Dream” is to now RENT instead of purchase a home. My thought on the conclusion was what are they basing their analysis on? While I can so vividly see that the housing market has taken a beating over the last couple of years I also STILL see the positives of owning and buying real estate today especially for my fellow military families. First and foremost, as a military member you are given…not loaned but given funds that will help pay most of if not all of your mortgage expenses if you buy wisely. Secondly, with the benefits offered to service members of not having to make a down payment on the loan when purchasing is also a big plus. Imagine putting 10 percent of your liquid cash down on a $200,000 home. Ladies and gentlemen that’s $20,000. I’m not too sure if I’d be so ecstatic having to fork over that amount of money up front. Some companies even require you to put 20 percent down. (YIKES!)
Being a part of the United States Military does have its benefits and the ability to purchase a home without having to save huge amounts of money just to fork over in a single sitting is one of them.
Having been a licensed Real Estate Agent in the state of Hawaii and Virginia and a military spouse I have heard too many times young military people say they are scared to buy a home. Not only that, I have heard the more senior individuals express that they will wait until they retire because they know they will keep moving. Well let me tell you, there is nothing to be afraid of and moving periodically is the beauty of it all. I personally, know of a military couple who have not yet been affected by the crash of the so call “housing bubble”. Their take on it is that we must make sure that we do not buy above our means and that we, meaning military families, should research the areas to decide which would be a better place to purchase. Now, while it is true that we all have very different reasons for why we choose to purchase a certain type of home and where it is located there should be one common deciding factor that is shared between all military families.
“ If we have to leave suddenly and desire not to sell, is this a good area that can accommodate a rental property and if so will buying at this price allow us the opportunity to charge a reasonable rent?”
It is important that we understand the dynamics of our situations as families who travel to and reside all over the world even unexpectedly at times. Most PCS moves are every three to four years per family. So while buying a brand new home is something we all would love to do we must consider the possibilities offered from buying an older home with great potential. What can this do for you? Well, with most new developments you are purchasing them at the peak of their price hoping that they will increase in value soon. However with an older purchase there is always room for negotiation especially in a buyer’s market such as the one that exists today. If you buy under the assumption that you may not be living in the home within a few years you may choose to forego purchasing the more expensive because the home is new and instead choose the less expensive at the lowest negotiable price possible. When you buy beneath the comparable values of other homes in the area you have already begun to set yourself up for survival of the real estate game.
This recent MSN article lists 5 reasons why people SHOULD NOT buy a home. Below I am listing four good reasons why military members SHOULD purchase a home.
1. TAX BREAK – When you purchase a home you are able to write off the taxes and interest of that home each year during tax time. Not only that but if you choose to rent the home, you will also be allowed to continue writing off the taxes and interest plus depreciation of the home AND the cost for any repairs made while it is a rental. The best part about this…you are able to reap these advantages because of free money given to you by the government for serving your country.
2. BUILD A PORTFOLIO – This is yet another advantage for the military because there are ways in which you can own more than one home and it is still done with tax free money. If held and rented out for periods of time and were purchased in the right places, you will see increases in value which only adds to your net worth.
3. NO 10 TO 20% DOWN PAYMENT – Some people feel as though they are saving money for a lifetime and never reach $15 to $20,000 of liquid cash to give as a down payment. BIG PLUS.
4. YOU WILL ALWAYS HAVE A HOME TO COME BACK TO – Need I say more?
The overall notion for this article is that while you’re spending time traveling around the world and moving from place to place you have an asset that is increasing in value and saving money for you. If we invest wisely in this tangible thing during our military years then we will have enhanced two of our greatest intangible assets…our time and our life.
I still have love for Real Estate.
Be on the lookout for next month’s article that will delve a little bit deeper into the Military and Real Estate connection.
Home loan info can be found on the Veteran Affairs website:
http://www.benefits.va.gov/homeloans/
