Military Family: Should You Buy or Rent a Home?

LESLIE: Marilyn, you’ve got The Money Pit. What can we do for you?

MARILYN: We are a military family. My husband’s in the military and I’m a stay-at-home mom to five kids and we home-school. And basically, in the past when we’ve moved, we’ve always bought a house and – basically, thinking that if you pay yourself it’s better than paying someone else. However, we’re moving to Illinois this time and the property taxes are quite excruciatingly high. And we’re just trying to decide if it’s better to buy or to rent this time.

TOM: So do you know how long your husband – well, first of all, thank you for your service and your family’s service. Do you know how long you will be in the Illinois area?

MARILYN: Well, it could be anywhere from two years to three, four, five. You never know with the military, you know.

TOM: Because I mean you know what the risk is if you buy a house and then it turns out you have to move again. If you can’t sell it or if you – if the market turns and it ends up not being worth what you paid for it, you could get underwater pretty quick on that. And so, in circumstances when you’re in the military, I think a lot of times it does make sense to rent. Because the other thing is you don’t want to have to move out of there – “Now I need to carry two houses” – maybe find yourself being a distant landlord to a property. Now, these are all difficult scenarios that you really want to avoid.

Have you spoken with your accountant about the tax consequences of perhaps renting instead of buying? Because there may be some advantages there.

MARILYN: We haven’t yet because we just found out a couple days ago, so …

TOM: And you know what? You can always – you can always rent first. Renting is a short-term commitment. I understand that moving is a hassle but you could always rent first, get to know the area, get more comfortable and then make a decision later if it looks like you’re going to stay. You don’t have to do it all in once.

MARILYN: OK. I guess my hesitation with that is that we have five small children. So I’d like to move as little as possible.

TOM: I would think that – better off selling it now, putting it on the market now. Maybe you’ll find a cooperative buyer who can delay the closing date until you guys are ready to move out. But I wouldn’t want to find you stuck not being able to get a buyer, running out of time, while your family needs to move on to the new location. So I think a bird in a hand is worth two in the bush, as my dad always used to say. So I would try to put that on the market now and hopefully they’ll sell quickly and you’ll be able to take your time getting to the new location.

And by the way, since I can imagine, with five kids, you find the house just chock full with stuff, the best way to get your house ready to sell – there’s a great article on our website at MoneyPit.com about this. But conceptually, what we’d like to see you do is to try to declutter as much as possible, make those rooms look big and bright. Because anybody that’s going to buy your house is going to probably move in from, say, another crowded house or crowded apartment. You want to make sure it looks like your stuff can – their stuff can fit in there. And then if you have any rooms that need to be repainted, just choose neutral colors for the same reason. Make it look open and inviting and that will help you sell the property as quickly as possible.