Buying a Home While on Active Duty
Should You Buy a Home While on Active Duty?
Most military assignments last four-to-five years, some even less. So, does it really make sense to buy a home rather than rent one if you’re active duty?
Some military housing experts say no, but many real estate savvy members of the military say, “Definitely buy a home or homes while on active duty if you can.”
“I started flipping when I was in the service, and I advise other military personnel to consider doing the same,” said 20-year Army veteran, Terry Martin-Back. Like many other military personnel, Martin-Back realized early on in his career that buying his home while in the military was a good thing. “You can make 20-30% of your purchase price back on your sweat equity,” he said. Do that with enough homes and save what you make and the money adds up.
It’s not just the money you can make buying, selling, and renting, he said. “When you own your home it’s yours. You can paint it, change it, have a yard, buy a dog, and do pretty much what you want in it. You aren’t dealing with landlords and someone else’s rules. There’s a lot to be said for the freedom you have when you own your own home.” He should know. He bought his first home while on active duty.
“I got married in the service and I was living in the barracks,” he said. “Then my sergeant told me I had to get out and into a house, so I did.” That decision changed his life. He and his new wife bought a fixer-upper, fixed it up, sold it and kept on doing that until he left the service after 20 years.
“Owning your own place just has a different feeling. You’re not having to fight over a parking lot. You have your own driveway or garage,” he said.
Martin-Back is now co-owner, Broker Associate and certified general contractor for Exit Realty in Gainesville, Florida. Before he became a Realtor, then broker, Martin-Back was a Platoon Sergeant with the 4th Cavalry of the Big Red One during Operation Desert Shield/Storm.
“I thought about home every day,” he said. When he got back home he kept working on the goals he’d set for himself – including buying and flipping homes. “When my supervisors asked me what I was going to do when I got out (of the military) and I told them I was going to flip houses, they had a hard time believing me, but I was driving a Porsche while on active duty so it was hard not to believe I was making money.” He wasn’t a good money manager, he said, but his wife was.
Tips for buying a house while on active duty
- Always think about your end goal. Ask yourself, when will you be moving, and if you can you sell it or rent it so you have cash flow. You can hire a property manager to manage it while you’re on active duty.
- When you go to qualify on the mortgage, qualify on the lowest income, even if both of you are working. If one of you loses your job, you still need to be able to make that mortgage payment. Take all the extra income, like food per diems while traveling, and other extra incentives, and just qualify on the lowest income you could ever have. That way when you’re not collecting that extra money you’ll still be able to make your monthly payments.
- Take your time buying your house. When you move onto a new base or duty station, look around. Find out about the different neighborhoods. Talk to a few realtors, and ask about different areas around town before buying.
- There are other military personnel who have bought property or a home. Look for them. As a member of the military, you can assume their mortgage. “Give them a few bucks to move, and move into their home. You’ll make some money and they won’t lose money.”
- “You make your money when you buy your property, not when you sell it,” he said. Know what the median price for the neighborhood is and buy under that. Know what you’re going to have to put into the house (carpet, cabinets, paint, roof, repairs etc.) to flip it, what the appreciation rate is going to be over the next three years, and what your profit needs to be before you even make an offer on the house.
- Build up a reserve for each of your properties. If something goes wrong with all of them at the same time, you’ll be prepared.
- Talk to other military members who own their own home about what they did right, and what they did wrong. Learn from everyone.
- Don’t buy your dream home. You can build your dream home later. This is an investment home.
- Don’t buy a new home. You’ll pay top dollar and if you’re only going to be there 3-4 years, at 6-to-8 percent appreciation you’re not going to make much on it when you sell it.
- Go to Youtube.com and learn all you can about how to buy, flip, and invest in real estate. Martin-Back has free and paid courses on his website, but tells people they can take classes at their local community college, or online. “There are links to various places from my site that will help people get started,” he said.
House Flipping for Beginners
“Flipping homes is hard work,” Martin-Back said, “But you can do it. There are a lot of people who don’t have the skills I have, and I’ve had from being a kid growing up in a family of do-it-yourself-ers. But you can learn skills.”
- Buy some basic tools – a chop saw, drill, jig saw, hammer and learn how to use them if you don’t know how already. Go to Youtube.com, ask a friend to teach you, or help friends on their homes in exchange for the experience and some lessons. Don’t expect to be a pro right out of the gate.
- There are hundreds of seminars, books and videos about house flipping. Don’t believe the ones that hype the process or make it sound easy, or like a “get rich quick” opportunity.
- Hire people to do the things you need to pass inspection for, like electricity, plumbing, and wiring. You can often learn a lot, or enough to do it yourself, and then pay a pro to double-check and sign off on your work for an inspector.
- Start with basic skills like painting, yard work, installing cabinets and tile, then move on to bigger things.
“Neither of us knew what we were doing when we started,” he said. “We had to try, fail, learn as we went,” he said. “Stick with it. It’s worth it.”