Buying a Home with Renting in Mind


There’s a group of people that treat home buying differently from the rest. Not only do they buy homes more often than members of the general population, but they often condense it down to a matter of days rather than weeks or months. Who does that? 

Military families do, that’s who! Military families engage in home buying like no other. But why? What makes them different? 


1) Military families expedite their house hunt. 


Military families don’t have much time to shop around. Service members only receive a set amount of house hunting leave, whether you use it before your PCS to scout out the lay of the land or on the tail end after you’ve already made your move. 


Regardless of how you do it, most military families don’t use the entire leave to look at homes; after all, it’s not your forever home. Take time ahead of moving to whittle down the number of houses on your list, then virtually tour that list before deciding what to use your precious time on to visit in person. Taking two to three days to house hunt and having seven to eight days to decompress between assignments--priceless!


2) Military families buy a home to fill a need for a few years, not a decade or more. 


The other, and perhaps the greater differentiator between military and civilian home buying, is  that military members buy homes they’ll only live in for two or three years. That’s crazy talk by civilian standards.


According to the National Association of Realtors, the average civilian family remains in their home for approximately 13 years. Meanwhile, a typical military family has moved four times in that time frame. Knowing that you must typically own a home for at least five years before breaking even on the cost of purchase and general homeownership costs makes it hard for others to understand why military families choose to buy homes again and again. 


But here’s the deal, just because you own a home doesn’t mean you have (or get) to live in it. Homeownership is a real estate investment, whether it’s to put a roof over your head or someone else's. Cue the term, rental property. 



Rental property investments can be a fantastic way to create passive income for military families who may find it difficult to grow their wealth. But there’s an art to it, and it requires you to think beyond your family’s specific needs when buying a home and look more objectively at the property’s functionality and aesthetic. 


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Read also, Is a Rental Property the Right Investment for You?


What steps should you take as you look to purchase a home with the view of renting it later?

Tips for Buying a Home When You Plan to Rent It Out Later

1) Prepare your family’s short list of home needs.

Keep in mind the distinction between "needs" and "wants." A three-bedroom home to accommodate parents and four children is a legal need (most states only permit two kiddos per room), while quartz countertops are a want. Your casserole will taste just as delicious when served from Formica countertops!


Upgrades like that only merge with a need when they’re essential for helping to make your home competitive in a rental rather than a home selling market. You’ll generally need higher upgrades for selling than you will for renting, and when buying a home to rent, you want to minimize high-end upgrades when possible because that will help keep your long-term replacement costs down. 


Your list may look similar to the following:


  • Master bedroom suite: Having a getaway retreat is a favorite of renters and home buyers alike.
  • Two or three additional bedrooms: You need space for three kids and a room for visiting guests.
  • Home office: A dedicated work-from-home space or an area that could be carved out of the master bedroom or guest quarters.
  • Garage: From auto maintenance to an in-home gym, a generous garage or easy access shed is a big plus.
  • Outdoor living space: This could be a backyard patio for entertaining or a fenced yard for secure play with your children and dogs.

Although it’s fun to dream of a grand estate, it’s a good idea to keep your list of needs somewhat short. By focusing on the basics, you can keep your options open and buy a home that’s both good for your family now and good for your family’s long-term needs as an investment property. 


2) Do a little homework.


Again, looking beyond your family’s needs, you’ll want to find a house in a neighborhood that will interest other families and serve them well. Your research should include what you can find on Google and police reports as well as feedback from other military families in the area, whether you find that information by word of mouth or via social media groups. Everyone knows someone from somewhere! Use the incredible military community to network and find the fit that’s best for you.  


Here are a few things to look for as both you and potential renters may overlap in needs: 


  • Proximity to base. 
  • School district. 
  • Nearby playgrounds or pools. 
  • Driveability. 
  • Walkable destinations. 

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3) Research property managers. 


Imagine if military orders come up for Norfolk, Virginia, you may wonder what to do with your house in San Diego, California. Never fear! Our free ebook, PCS Ahead: Should I Rent or Sell My Home, will help guide your decision whether to rent or sell. 


If you choose to rent your home, you’ll need to make a few arrangements. Before you move across the country, it’s good to have a point of contact for any repairs that might come up. Rather than you managing issues like a running toilet from thousands of miles away, a property manager nearby can be the helping hand you’ll most likely need.


Ask your real estate agent for recommendations and check out MilitaryByOwner’s business listings for property managers in your area, as well as online reviews of property managers in your community.


4) Select a list of no less than five  property managers to contact.

Though you may find a property manager who looks ideal, they may not be a good fit for you based on their cost model, operational model, or because they’re simply not accepting any new clients. 


You’ll find that at least one of the other property managers simply won’t respond to your inquiry. Another one may not have sufficient answers to your questions, and you may not get a good vibe from another. 


Remember, you’re planning to entrust one of your greatest assets to this person, so if you don’t have a good feeling about it, trust your instinct and move on; you’ll find someone else.


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5) Weed through the responses. 


How the property manager responds to you is a direct reflection of how they will respond to your prospective tenants. Keep an eye out for the following:


  • Timeliness. You don’t want your home sitting on the market and costing you money because your property manager is not efficient in responding to inquiries. Part of that is understanding how many properties they’re managing. 
  • Repairs and maintenance. “Some property managers request a reserve fund that they can use to make necessary repairs or maintenance around the property without consulting you first. The fund is usually somewhere between $250-$500. Once that’s depleted, then the property manager must contact you for additional expenses. You’ll also want to set a maximum amount for one purchase. For example, even if there’s $500 in the fund, the property manager would need to receive your permission to spend it on one item.” — 3 Things to Know Before You Hire a Property Manager
  • Communication skills. As a landlord, you are ripe for lawsuits. Make sure you have a property manager who communicates firmly and clearly to avoid misunderstandings between them and yourself or the property manager and the tenant. 
  • A market analysis. Does the property manager know what types of homes are in the highest demand? This doesn’t have to be a fancy updated graph but rather a discussion of the market, trends, and rental market needs. What inquiries do they receive, and what regular requests do they find hard to fill? Ideally, your short list of home needs will meet up with the requests that he finds hard to fill.  

Pro tip: compare the information provided by the property manager with that of your real estate agent (if you hire one). Is the information from the property manager’s in line with his understanding of the market? If there are major discrepancies, then repeat the process and speak with additional property managers until you find the answers you need.


6) Run the numbers.


Now, the biggest question, can you make money off the home as a rental property? 


“For most homeowners who decide to rent their property, one of the biggest questions is how much to charge for rent. Yes, the mortgage has to be covered, but there’s so much more that goes into the formula. Taking into account several factors changes the rent per month payment significantly. Smart owners budget for many circumstances.” — A Guide for the Unexpected Military Landlord 


Here is a list of things to calculate: 


  • Mortgage rate 
  • Interest costs. 
  • Insurance costs: In addition to your basic homeowner's insurance, there will most likely be an increase in insurance payments from the conversion of a homeowners policy to a rental property.
  • HOA fees (if any).  
  • Higher tax rates for investment rentals. 
  • Property management fees.
  • Maintenance (roughly one month’s rent is a good place to start). 
  • Basic Housing Allowance: Calculating your BAH won’t prove too helpful as you’ll likely be on to your next duty station come time to rent out the property. But it’s a good idea to know what the average BAH is, given that military renters will probably be your market. Use this BAH Calculator

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If, based on all of the market analysis that you’ve conducted, you won’t be able to cover your costs, then buying a home and rental combo this time around is not necessarily the best option for your military family. At the very least, you’re looking to break even as you’ll have this property’s expenses plus those of your primary residence (after your next PCS) to foot.


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If that’s the case, then rather than investing in a home right now, take some time and add to your savings. Then, at your next military assignment with a different market, you’ll feel more prepared for buying a house that you could later lease.


See also, Should Military Members Rent or Own a Home? What to Know Before Deciding.


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