When you serve in the military, you’re always on the move. Some active duty service members see this as a benefit and others see it as a sacrifice.
If you’ve been sent to San Diego, should you rent a home in the area, or should you buy something?
There’s no one answer to this question. It’s going to depend on a lot of personal factors, such as whether you have a family, where you want to ultimately end up living, and what your financial situation looks like.
Here are some of the things you should consider for yourself and your family before you decide whether you want to buy a house or rent one:
- How long are your PCS orders?
- Are you likely to re-tour or retire in San Diego?
- What kind of budget do you have to buy or rent?
- Do you already own property somewhere else?
There are several advantages to buying, especially in a market like San Diego where you can easily rent the home out if you get reassigned in a few years. But, if you have no interest in living in San Diego or holding onto an asset that’s located in this market, a rental might be your best option.
Think about where you are and what your plans are throughout your military career and after it. That will help you decide what’s best. You should also talk to a San Diego real estate agent and property manager. You’ll get some good insight about what you can expect from the market and what the benefits and risks might be to each option.
Buying a Home in San Diego: What Military Members Should Know
People are always talking about buying a home like it’s some sort of requirement. When you get older and establish a career and start a family – you’re supposed to buy a house.
This is a general financial and personal goal for a lot of Americans, not just service members. There are some great reasons to do it, including tax deductions, growing equity and appreciation, the consistency of predictable mortgage payments rather than fluctuating rents, and the safety and security of having a home of your own.
These are all excellent reasons that people have for investing in real estate and buying a home. Many people feel like they’re “throwing away” money on rent since they’re not actually walking away with any property of their own after paying month after month and year after year.
But it’s not all good news. There are a lot of costs that come with homeownership.
If you’ve never purchased a home before, you might be surprised at what you’ll need just to close the deal and get the keys to your new home. With down payments, closing costs, inspections, and insurance premiums, you could be out thousands of dollars before you even get your keys.
Then, there are the ongoing costs. The property taxes, the repairs that may be needed. You’ll need to heat and cool that home, pay for electricity and water. If your home is in an HOA, you can expect to pay monthly or quarterly dues. Home values are at risk of decreasing. The neighborhood might change dramatically, leaving you wishing you could simply not renew your lease agreement and walk away.
Most military members wait until they retire to buy a home. But, you don’t have to. You can buy when you get your orders and keep the property even after you move out again. San Diego property managers can help you rent it out until you want to move back in.
Leveraging the VA Home Loan
One good reason to buy, if you’re a military member, is access to the VA loan. Some of the best features of this home loan include:
- No down payment requirement.
- No private mortgage insurance is required.
- Flexible credit standards for approval.
This is one of the most affordable loans available, and the financial guidelines are not nearly as strict as if you were trying to get a traditional mortgage. With this mortgage product affordable and accessible, it’s an excellent reason for service members to take the plunge and buy a home.
There will be some work required on your end because not every mortgage lender is experienced with working on these types of loans. You’ll have to find a lender who has done it before. There also tends to be a lot of red tape with federally backed loans. You can expect a lot of paperwork, a lot of details, and the feeling that you’re required to provide the same information over and over again. Plan on inspections and appraisals, and don’t get frustrated by the pace and the process.
What to Do When You Move
If you do decide to buy a house, what do you do when the PCS orders come in again and you’re ordered to pack up and ship out?
You will have to either sell your home or rent it out. Either way, you’re leaving it behind.
Selling it likely won’t make a lot of sense, especially if you’ve only owned it for a few years. You can, however, rent it out to tenants. You might find you’re even renting it out to military tenants who are moving into the area.
Contact a San Diego property management company when this happens. You won’t have to worry about finding a tenant, taking care of repairs, or collecting rent. Your property manager can handle everything for you. The benefits to renting out your home are numerous. You’ll earn some rental income every month, hold onto a valuable investment that’s only increasing in worth, and you’ll know that you still have a home in San Diego you can return to when you’re ready to retire from the military.
Renting a Home in San Diego Instead of Buying
Renting over and over again can feel like a waste, especially if you really want to own your own home. But, the frequency with which military members must move makes it impossible to buy sometimes. You never really know what you’re going to get from a landlord or a property manager, and sometimes the house you choose to rent turns out to not be what you expected or really wanted.
Renting also means rental increases every year. You’ll need cash for security deposits and you can’t do much to personalize the home and make it your own when you’re renting. You can move in your things, but you cannot paint the walls, make renovations, or change the design.
The rental market in San Diego is pretty strong. If you’re looking for a property, you’ll be able to find one that’s well-maintained, located in a good neighborhood, and close to schools, shops, and restaurants. Most landlords love renting to military tenants.
You’re not building any equity in a home that you rent, but you’ll save some money on things like maintenance. If something breaks down, you won’t have to be responsible for fixing it. There’s no need to set up an emergency maintenance reserve or to worry about closing costs.
San Diego housing is pretty expensive if you want to buy. You’ll need to have the income and the savings to support it, and that might lead you to determine that renting is better.
You also have the option of on-bases housing if that’s what you’re looking for. This might seem like the most affordable option for some military members.
Keep all your options open. Deciding whether to rent or buy is a decision you’ll have to make every time you move.
Paying Rent vs. Paying a Mortgage
In most markets, a mortgage payment is often cheaper than a rental payment. This does not mean that buying is ultimately cheaper than renting, especially in San Diego. Your basic housing allowance can cover some of your mortgage. But, you’ll have to do some budgeting if you want to know which option will really help you save the most money.
Remember that when you own a home, you’re responsible for the roof and the appliances and the floors and the yard. When you’re renting, you can simply submit a maintenance request if something goes wrong.
Owning comes with association fees, taxes, insurance.
But, as a homeowner you do get some tax breaks that renters do not have access to. For example, you can deduct mortgage interest.
We know this is a big decision for military members and their families who are constantly moving to new locations. As you prepare for your arrival in San Diego, we’d be happy to help you settle in. Contact us at Chase Pacific Property Management & Real Estate Services. We’ll talk through your options and let you know what you can expect from the sales market and the rental market. Things can change pretty quickly, and we’re experts in helping people make the decisions that lead to better outcomes. Whether you’re ready to buy or looking for a rental, we can help.