Military Home BuyersRental Home Property May 6, 2024

Maximizing Your Military Home Purchase: Unlocking the Potential of Rental Investments

When I meet with my military home buyers, one of the most important things we talk about is their exit strategy after their home purchase. I know it sounds a little backward, but if my buyers are considering buying a home with renting in mind, we have to discuss this topic so I’m clear about their future goals. Some buyers haven’t given it much thought, but others already know they see a rental property transformation and landlord life in their future.

What's your goals?

We all know the military drops a lot of unknowns in a service member’s life, like a short-notice PCS or an unexpected medical retirement. It’s a good idea to take into account how your home purchase would fit into those plans, too.

Let’s Talk about Your Goals

I know you’re excited to see properties near Wright Patterson Air Force, and I can’t wait to show them to you. First, I want to hear about your future aspirations so we can choose the best property.

The reasons you want to purchase a home are important contributors to the property type you should consider. A pure investment property looks different from one you’ll live in temporarily and then return to as your forever home.

    – Do you think you’ll PCS from Wright Patt AFB, rent to someone, and then return for another assignment?
    – Do you envision holding onto the house, renting it, and selling it after a significant milestone like retirement?
    – Is this property strictly a real estate investment, or will it become your forever home?

It’s best that we chat about all of these options so we can visit properties that will check the boxes you need, whether you live there for a short while, are primarily concerned with passive income, need a home that attracts the best renters later, or want a long term home solution.

VA Loans and Your Primary Residence

Many military buyers use their VA loan to buy a property. Why not? It’s a valuable benefit of service. But, did you know that most VA loan lenders require that you wait 12 months before you can rent to tenants? There’s some gray area here that we can discuss, but for the most part, VA lenders want the home to be your primary residence and not purchased as an immediate rental property.

Learn about VA Loan Basics for Military Home Buyers: Down Payments, Eligibility, and More.

Rental Home Expenses

You probably hope to earn more than your mortgage payment from your future rental property. That’s a reasonable goal, and many homeowners run lucrative rental property businesses—yes, you’ll become a business owner! However, the reality is that sometimes the numbers might not be in your favor after you calculate rental property expenses. After some market analysis, I can help you choose the right property so you’re comfortable with your projected monthly rental income.

Take a look at some of these expenses to consider:

    – Increased tax rates for investment rentals.
    – Maintenance and repair fees for normal wear and tear and unexpected repairs.
    – Insurance rate. You’ll need to convert from homeowners to rental property insurance.
    – Property management fees.
    – Mortgage rate.
    – Interest costs.
    – HOA fees.

Landlord Responsibilities

Do you have landlord experience? Some of my home buyers don’t have this background, so I spend time talking about what’s involved with becoming a landlord. I can also refer you to financial, legal, and rental property professionals to help you make a smart decision about buying a home with rental income potential.

DIY or Professional Property Management

One of the main topics we talk about is how you’ll manage the home from afar. Active duty members are some of the busiest people I know, so it can be challenging to field problems at the house if you’re miles away. However, many service members successfully take on the challenge and enjoy the process.

Are you searching for a home from afar? Read Military Home Buyers: Conquering the Long-Distance House Hunt for helpful hints.

A property manager may be the solution if you don’t feel you can give the property the proper attention while living far away. They typically charge a fee for their service, usually about 8% to 12% of the rental income; others charge a flat fee. This expense is a big part of the overall equation when deciding whether or not it’s worth it to buy a home with a plan to rent it while you’re away.

I’m happy to help you weigh the pros and cons of hiring a property management company to assist you and your renters with normal and abnormal occurrences to go along with homeownership.

Some of the topics you’ll need to learn about or hire a property manager who is familiar with are:

– The Fair Housing Act– The Service Members Civil Relief Act

    – Military Clause
    – Property marketing and advertising
    – Tenant Screening
    – Vacancies
    – Rent collection and late payments
    – Maintenance schedule
    – A roster of professionals: electricians, plumbers, handy person
    – Evictions

Rental property can be a fantastic financial investment in your future, even beyond military life, but there is a learning curve if you don’t have landlord experience and rental property. Part of the experience is also learning to choose the property with the right mix of property amenities that your family needs while living in the house, in addition to predicting what your future tenants will pay top dollar for in the years to come.

If you’re interested in buying a home with the possibility of becoming a landlord, contact me so we can discuss your plans. I am proud to help military families choose the best home while investing in their futures.