Being in the military is a tedious job, indeed. But it is also one of the most respectable professions in the world. The safety of the entire country rests upon the shoulders of the military professionals. This is an outward view of the life of an army professional.
But, there is another aspect as well. Life in the military essentially includes moving from place to place. Military service is often accompanied by frequent Permanent Change of Station (PCS), where active military personnel are relocated from one duty station to another. Of course, uprooting yourself and your family from a familiar area to an unfamiliar one is challenging and stressful.
There is another aspect to the problem: to decide whether to rent or purchase a home during each PCS. Nobody would want to stay in a house with the owner around, poking his/her nose in everything. But that doesn’t also mean you can purchase a home wherever you put up because it is not confirmed whether you stay there for long or not. So, you must be very careful while deciding whether to rent or buy a home during each PCS. We hope this article clarifies some of your doubts and assists you in making a suitable decision.
Things to Consider While Deciding Whether to Rent or Buy Home
Here are a few things to mind before making the big decision:
1. The Duration of Stay
You need to know or at least estimate how long you are putting up in that place during the Permanent Change of Station. This is usually assigned for a period of two to four years. You can think of investing in a home if you are sure you are staying in that place for more than three years.
What happens here is that the real estate value of the home fluctuates very much. A period of three years is like a safe zone where you can expect at least what you paid for it.
Though most banks give around 80% of the property’s cost, you need to shell out the remaining 20%. Also, don’t forget to consider the unrecoverable paper costs like registration, stamp duty, brokerage, etc. So, make sure you have enough funds to at least meet these basic requirements before going ahead.
3. The opinion of the members of your family
This one matters the most because, ultimately, they will stay in the house while you are away at work. Have an explicit discussion on the issue and make sure you know if they want to settle in that locality or if they are willing to look for a better place. If they love the area, then you could go ahead and purchase the house.
What not to Consider While Buying or Renting
Here is one big mistake that many people commit while making the decision.
1. Cost-Benefit Analysis of Rental vs. Funding
Many people think about this. They calculate whether it is cheaper to rent or borrow money from a bank to purchase a home. While this is not that bad, it just considers the cost. Rentals vary to around 2-4% of the property’s capital value, whereas the rate for borrowing is generally about 10% of the capital value. You need to do this if you are only analyzing the cost-benefit. But there are other factors like the psychological satisfaction of staying in your own home. So, look at what is crucial for you.
2. Expect Immediate appreciation for your property.
Some people expect the value of the property to increase within a span of one or two years. Note that this takes time. If you are looking to purchase a home as an investment, have long-term plans of about five or more years. It estimates that the real estate prices get an appreciation of nothing less than 9% in five years. Investment in property and property management is always a good option for the long term.
Now let us look into the pros and cons of both Renting and Purchasing.
First, let’s consider Renting a Home during the Permanent Change of Station (PCS).
Pros of Renting
1. Lower cost
If you rent a house, the house’s per month cost will be relatively low compared to the bank EMI’s. So, you can enjoy the comforts of a home at a lower price.
2. No Initial Funding Required
If you are taking a bank loan to fund your home, you will have to pour in some money as a down payment. Whereas while renting a home, except for an advance amount and other minor costs, there is nothing much that you are investing.
Renting houses gives you the flexibility of living in the home of a variety of landlords or landladies. This will provide you and your family a vast experience interacting with many people. Also, living in various localities will help you grow your contacts.
4. As a trial before purchasing
Renting a home in a locality will help you decide whether you would like to put up in and have a first-hand experience of living in the locality. If you shift your localities frequently, you can assess which locality is the best to live in. You can, later on, proceed with the purchases. This is just like having a demo before purchasing the actual product.
Cons of Renting
1. Frequent packing and unpacking
This is the most irritating of all. You need to pack your entire house and unpack it in another house. This could be very frequent as you can stay in a rented house only as long as the contract holds good. If you or the landlord does not want to extend the agreement, you will have to shift your house.
2. Less Independence
A rented house, especially with a possessive landowner around, is very annoying. He/she might interfere in every activity of yours. You will not even have the independence of having even a Repair or Replace Your Roof work done without his/her permission. This condition is even worse if you have a family with small kids who love to draw on the wall. The owner might poke his/her nose very often, thus disturbing your privacy.
3. Other Inconveniences
There will be other minor but irritating inconveniences like parking, pets, etc. These things have to be according to the taste of the landowner because of obvious reasons.
An Estimate of Renting
As the British proverb says, fools build houses, and wise men live in them. Renting a house is a perfect option if you have limited funding, limited experience, and willingness to explore the world. It is also useful to expand the comfort zone of you and your family. Be ready to go through those irritating experiences like owner interference, lack of independence.
Now, let us have a detailed look at purchasing a home.
Pros of Purchasing a home
1. You have Unlimited Independence.
If you have a home of your own, you are the boss and can do anything you want – small and big carpentry works, owning pets, letting your kids draw on the walls, etc. You are not answerable to anybody but yourself.
2. No Frequent Shifts
Packing and unpacking frequently is indeed the greatest irritation. If you have a home of your own, you can settle in your sweet home, and there is no moving unless you have your next PCS.
3. Fewer Inconveniences
Owning a home has fewer inconveniences than renting as you can have a dedicated parking space for yourself, and there are no fights for that parking area again.
4. No Fussy Land Owner
A fussy landowner’s problem is solved when you purchase a home. So, nobody is banging on the door for the smallest sound of a drill from your kitchen or bathroom.
5. Source of Income
You can become a landlord or landlady, renting houses to others, thus earning some money. You can let it on rent when you have your next PCS and use the monthly rent to pay for your new house’s EMI. It is also an investment that you can sell in times of need.
6. Independence to Return Anytime.
If you loved the place or locality, you could always return after your retirement. While you can return when you have rented, there is no guarantee that the home in the same locality will be vacant.
This is one of the biggest reasons that people look to purchase homes. When you have your own home, you have a sort of satisfaction that it is your place. This satisfaction is the key to a happier life.
Cons of Purchasing a Home in every PCS-
The above points must have convinced you to buy a home instead of renting one but wait and think. Here are a few drawbacks of purchasing a home on every PCS.
1. Higher Monthly Expenditure
Rents are always lesser than the EMI’s towards home loans. Plus, you will also need much initial investment (about 20% of the house’s capital price).
2. Problem with Maintaining
When you own multiple houses in different cities, maintaining the properties is not an easy task. You will also have to handle many tenants at a time, and also you will have to shell out all the renovation and repair costs. This could be quite tedious.
3. Psychologically Limits your Thinking.
Staying in one particular house for a very long time might confine you to your comfort zone. You and your family will not extend their comfort zones and adapt to and deal with new situations.
An Estimate of Purchasing
Purchasing usually requires a large amount of investment, both initially and over time. Plus, you can’t change the locality if you don’t like the house or the locality. So, you need to be extra careful while selecting a home for purchase. If you are looking to put up in Miami, you can find excellent homes for sale through the Miami real estate agents. Also, arrange for the initial funding that could come to around 20-25% of the property’s capital rate. Living in one’s own house gives a secure feeling, and you may also become landowners earning rents. So, you must plan out things well before purchasing.
Few Tips to be kept in Mind while Renting and Purchasing a Home
There are a few common things that you must remember when you decide to put up in a new town while on a PCS.
1. Initial funding
You will always have to have some money ready with you whenever you decide to put up in a new place. If you rent a home, you will have to pay the advance, and if you purchase, you will have to fund at least about 10-20% of the home’s capital value.
2. Real Estate Agents
This point is crucial, especially if you are new to your next PCS. You should find well-reputed real estate agents in that area. Look up online websites before you hire one. This helps you find the right home.
Renting a home or purchasing a home during each PCS is entirely your personal choice. It should cater to your housing needs depending upon your choice and resources. While both have their pros and cons mentioned above, look at what is best for you and what compromises you can afford to make. Prioritizing things is the key. So, first, sit down, chalk out your plans and other details, and go ahead. We wish you all the best for your next PCS.
Author Bio: Ross is a full-time content marketing specialist and a passionate writer who loves to write about creating an aesthetic and ambient living environment for everyone. She focuses on sharing ideas and techniques learned from his experience in a concise manner so that it can be used by everyone to make their surroundings beautiful to live in. Currently, She’s working with Roofing Company.