Airman Mildollar, the author of the Military Dollar blog, introduced me to a saying that has become my new favorite.
“When you rent, you never pay more than you rent each month. When you buy a house, you never pay less than your mortgage each month.”
Unfortunately, neither Airman or I know the source of this brilliance, because I would totally send them a gushing note and maybe even some Fairytale Brownies. (Those things are the bomb.)
I spend a super-lot of my days being a house-buying Grinch and basically trying to talk military families out of buying a house. There are a ton of reasons why buying a house in the military is a risky business. In addition to the usual risks of homeownership, military buyers are faced with:
- A higher likelihood of putting down too small a down payment or not having sufficient cash reserves to manage homeowner surprises (due to the VA loan program)
- Moving before they have built up enough equity to cover the selling costs
- Inability to “wait out” downturns in the local real estate market
- Increased chances of needing to rent the property at a loss because they can’t sell
All of these things are good reasons why military families should rarely buy houses while they’re still on active duty. But the simplest reason is the reason listed in the quote above: Renting controls your costs. Buying a house opens you up to a whole host of expenses you probably haven’t even thought about.
I’ll use myself as an example. I’ve owned a couple of houses (I wasn’t very smart when I was younger), and I still haven’t gotten great at estimating the costs of running a house. Our current home is no exception. We bought this house for purely emotional reasons – it makes no sense financially – because I wanted to ensure that my kids wouldn’t have to move during these back-to-back tours and I desired a house with a first floor bedroom and bath for less-able relatives and they are impossible to find in this market. So the house purchase didn’t make sense to begin with, but at least I though I relatively knew the expenses going in. But there have been a lot of things I didn’t anticipate in my budget, despite 25 years of experience and having lived in this area three times now.
- The heating bills on this house are astronomical. It is heated with propane. We’ve had propane before, but not in the US. It’s crazy-expensive here!
- This house has very steeply pitched roofs that are high off the ground. In our previous houses, my husband would happily go up on the roof to clean out the gutters a couple of times a year. I would have a heart attack if he did that here, so we hire a gutter service.
- Our property taxes have gone up $1500 per year from the previous owner. We did some renovations, so I know they would go up, I didn’t anticipate it would be that much.
While we are still technically within the amount of money I had allocated for total housing expenses, we’re not building up that reserve of cash that will be required for maintenance and repairs as they come up. I really need to start throwing an extra couple of hundred dollars each month into the account, because those maintenance and repairs will be coming eventually. There’s the stuff you should anticipate and the stuff you can’t reasonable anticipate, and you should somewhat expect that you’ll get hit with both when you own a house.
Stuff you should anticipate:
- Kitchen appliances need repair or replacement on a somewhat random basis
- Major household systems (hot water heater, furnace, roof) will need to be replaced on a semi-predictable basis
- Some sort of maintenance issue will come up regularly – I’d estimate at least every few months. Electrical outlets stop working, tub shoes come apart from tubs, and gutters have branches fall on them, driveways require upkeep.
Stuff you can’t anticipate specifically but you should anticipate that something will happen:
- Rodent/bug infestation
- Major plumbing leaks that require tearing out whole sections of your house
- Foundation issues
- Flooded basements
- Broken windows
Obviously, there are a million articles and resources and websites about the kinds of repairs that houses might need and how much they might cost and how frequently they might occur. You don’t need me to tell you about them.
But if you’ve never looked at from this perspective, you might find some value in considering the quote I started with.When you rent, you never pay more than you rent each month. When you buy a house, you never pay less than your mortgage each month. Click To Tweet
It might just change your budget, or your life, in a good way.
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