Advice Needed: Buy a Home Now or Wait Until We Settle Down?

Question

Hello,

I'm new to this. I've been a realtor for almost 6 months and am currently exploring real estate investing. My family moves almost every 2 years due to my husband's job, and we're trying to save enough for a down payment on our first home. I'm uncertain whether to wait until we settle down before starting our real estate investment journey or to purchase a home at our next location and rent it out when we move again. My husband, a veteran, qualifies for a VA loan, but we're unsure if we should use it for an investment property. I'm feeling lost—does anyone have any suggestions on what we should do?

Mya Toohey · Answer

Welcome to BP!!!  That is great that you are getting into real estate!  I would use your VA loan just like you mentioned.  I am in Florida and have had multiple clients do that exact thing.  I don't know what VA terms are so check with lender, but, I know it has been done before.

Theresa Harris · Answer

I know two people who bought while only planning on staying in the area for 2 years (both had a number of pets making renting more difficult).  They would have paid about $1500 a month in rent, but could buy a place where mortgage and property taxes were comparable.  Where I am (AB), we don't have as many closing costs as you seem to have in the US.  So even if they sold it for the same price as they bought it, the properties were likely $250K, it will cost them about $3K in legal fees (buying and selling combined), then maybe $11.5K in realtor's fees.  Pretending those are the only costs, it is about $15K just to buy and sell the home (I know there are maintenance and repairs as well as other costs). At the end of 2 years, they could have paid $36K in rent or basically $15K to own their house.  That is overly simplified and I've left out other things (inspections) as well as some things that are going to be the same whether you own or rent (utilities, moving).

the numbers are very different depending on where you live-both in terms of costs of buying and selling, cost of a home and cost of rent.

Drew Sygit · Answer

Do NOT rush in to buy something, but if you can find something 15-20% below market, then by all means snap it up.

You should also start networking with PMCs as you will need one when you move and convert to rental and they may bring you a deal.

Anna Philibert · Answer

Hello Nathan,

Thank you for your response. We're not planning to purchase anything in North Platte since we will be moving next year. We're considering buying a home in Texas and turning it into a rental when we move again. However, we plan to settle in Florida in a few years, so I'm uncertain if this is the best idea.

However, I do like the thought of purchasing a fourplex, or even a duplex in Florida, as our first investment property. Thank you again for your advice, I appreciate it.

Anna Philibert · Answer

Hello Jonathan,

Unfortunately I have not been able to find any real estate investor meetups in the town I live, but I do plan on attending them once we move to Texas. Wasting our VA benefits on a bad property is actually my biggest fear, which is why I'm not sure if we should purchase a home at our next location. I'm trying to learn as much as I can within the next 6-10 months, so I will be better prepared once we move. Thank you for your advice.

Theresa Harris · Answer

If you are moving every 2 years, it is unlikely that buying is a good idea.  While mortgage+ taxes may be similar to rent, you are not paying down the principal early on in the mortgage and closing costs on either end are likely to add up.  Do the math to see what the numbers look like.  If you are able to sell it as the listing agent and keep some of the realtor's fees, might be a bit different.  What may work is to buy a house that needs some work, then do minor renos while you are living in it and when it is time to move, turn it into a rental....but run the numbers to see if it makes sense.

Jonathan Greene · Answer

The only reason to buy a home while still in flux is if the long-term plan is for investment only. But why would you buy one property in an area you are likely to leave and then have to manage a one-off (not cost-effective)?

I would learn all you can, go to meetups, build relationships, but only buy something now if you are going to house hack it for the two years until you go and then just rent out your unit when you go. Still, not knowing where you are going is tough.

For military folks, eventually they usually decide on a hub where they want to plant roots (usually when kids are closer to school age) and then the hub stays and the party in the military comes back to the hub.

You have the VA benefits and they are great. Don't burn them on a bad property.

Nathan Gesner · Answer

It doesn't make sense to buy a home right now, particularly for someone who is moving every couple of years. In North Platte a $300,000 home will have a monthly payment of $2,500 or more, and you will be responsible for maintenance. You could rent a home for under $2,000 and save the extra money. When the market is more balanced, then it may make sense to buy a primary and convert it to a rental when you move.

There are exceptions, but you will need to learn how to really analyze a property to know when the numbers make sense. For example, you could buy a fourplex. Live in one unit, rent the other three, then rent out all four when you move in two years. A property like that is very likely to make financial sense. Unfortunately, it's hard to find a decent fourplex that will work.

Paige B. · Answer

Hey Anna! I work with investors and many of them have VA loans. The strategy that works very well is they use their VA loans to buy a 2-4 unit property, and live in one unit and rent out the rest. Then, when they move out they can rent the unit they were living in. It's a great way to build a rental portfolio.

Advice Needed: Buy a Home Now or Wait Until We Settle Down?

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