“Should we live in military housing or rent out in town?” I can not count the amount of times I’ve seen this come up in Facebook military groups. Throughout all the groups I have been in, this is the number one question when it’s time to PCS. However, it’s a difficult question to answer. What is best for one person might not be best for another. What I can do is, from a purely financial point of view, help you decide what would be better for your pockets. For other concerns such as the quality of the military homes, please join a FB group for that area to get the insider information from other’s experiences.
How much is the military housing allowance?
So first of all, you need to figure out how much BAH (Basic Housing Allowance) you will be receiving for your duty station. For that, you can use the BAH calculator on the DOD website.
Let’s use a popular location such as Norfolk, Virginia as an example with a married sailor fresh out of boot camp as an E-1. The 2019 monthly allowance with dependents for this rank is $1488. How much you can save will depend on your housing needs and where you’re willing to live. Better neighborhoods and school districts are usually more expensive when they’re close or you could find them cheaper but have a long commute to work. It might not be impossible, but it’s very hard for most to find a home at the ideal price, quality, and location.
What does BAH cover?
Although BAH is only meant to cover a small percentage of utilities, I try to always find somewhere I can have it all covered. As you should be able to tell by now, I love to save and make the most of my money by budgeting. So below, I will out line the things to consider for renting an apartment or home, having military housing, and buying a home. One may seem cheaper that the other at first until you look at all the costs associated with it. However, it might be different wherever you get stationed, so you’ll have to research prices and compare costs.
Note: When I discuss utilities, that includes water, trash, gas, and electricity
When renting a place, you usually have to pay an application fee, security deposit, and first month’s rent. You may also have a pet deposit and a pet rent if you have any. It is also always good to have renter’s insurance to protect your belongings and it’s not very costly.
Depending on the area and what you want, you can rent a 2 bedroom apartment for around $1000. This is the lowest price I’ve seen close to Norfolk Naval Base that’s not in a crime riddled area. This leaves you with $488 for utilities. Your utilities could be up to $200. You can also look for communities that cover some of them. This option would leave you with a good amount of BAH leftover.
Most homes I found near the base were a bit run down or in bad neighborhoods. For a 3 Bed/ 2 Ba the average in an okay neighborhood is at least $1300. However, the utilities can be around $200 to $400 (more or less). Again, all of this depends on your usage and how efficient the house you get is. There are people who have received outrageous bills regardless of their usage through some kind of fluke and sometimes water leakages. But this option is more uncertain, you can be right at the BAH amount or hundreds over it. With luck and perseverance, you may also be able to find a house for less per month, especially a 2 bedroom home.
If you are new to the military lifestyle, there is one thing you should know first. Most military housing I’ve encountered are not actually on a military base.
So, military housing usually takes all of your BAH allowance but it covers all your utilities. (In some other states, military housing can be less than the BAH). You will only have to pay for electricity if you go over the allowed amount, but some people have also gotten rebates for being under. This leaves the guesswork out of how much your utilities will be for the month and you only have one bill to pay. Plus, depending on the amount of dependents, you can get up to a 4 or 5 bedroom home which would be too much over BAH if you rented.
Buying a home
There are so many factors involved in buying a home. I have seen a lot of people boast that they paid little to nothing to purchase their home and move in. I’ve seen nice 1,300 sq ft, 3 bed / 2 ba homes in a decent area for less than 200k. This can come up to around $1,200 in mortgage per month, with $288 left from the BAH to pay for utilities and have some left over. Plus, there are also tax benefits to owning a home. But with the freedom of home-ownership, keep in mind that you’ll have to budget for any repairs, maintenance, lawn care etc.
The main issue, in my opinion, for a home comes when it is time to move. If you rent, will you fly back and forth every time your home is up for rent? Or will you get a property management company, and how much does that cost? And can you cover the mortgage if it takes awhile to find a new tenant?
If you’re selling and have only been at a duty station for a short time, you may not have paid down enough money on the mortgage to turn a profit. After 3 years of owning a home, most of your payments would have gone to the interest. This means that you won’t have paid off much of the loan you took out. The best thing would be if you were able to sell the house for more than you bought it for.
Something to note, just because your home went up in value, doesn’t mean you’ll be able to sell it for that much. I was about to purchase a home in Norfolk, Virginia before. After looking at the sales history of it, I realized that the owners were only selling it for 10k more than they bought it for. If that was all they could manage after 8 years, I knew I would be in a bind after the 3 years I would be here. I’m not a big risk taker and did not want to chance it.
But do not let me dissuade you, there are people who have bought and sold their homes in a short amount of time and made a GREAT profit. You just have to consider the area you are in and the costs associated with everything you plan to do. What is most important is that you don’t go in unprepared and end up in a financial bind. Talk to a financial adviser instead of the realtor who is trying to get a commission!
There is no perfect answer for which option would be best; the costs for each vary by location and distance from the base. It also just depends on your family and their needs. And sometimes it all just comes down to luck and the roll of the dice when it’s your turn to move.
Questions and Answers
Craigslist: Yes! Craigslist! For renting at least. You have to be careful and take precautions with this because there are a lot of scams, but it can be a great resource. I found the best little apartment before using it and the neighborhood was great as well.
Trulia: The best part about this site, to me, is the crime map overlay. While browsing through places, you can easily see how the crime is in those areas.
AHRN.com: A website made for military members
Realtor: Most realtors will help you find a rental for free, and of course should be talked to when looking to buy.
With VA home loans, you can purchase a home without needing a down-payment or private mortgage insurance. You can reuse this benefit and you don’t have to be a first-time home-buyer.
You have to sign up and possibly be on a wait list with the housing community where you are stationed. (These are usually privatized military housing and not really owned by the government.) To live in the house, most communities will take all of the BAH you receive as an allowance from your paycheck. However, they cover utilities such as water, trash, electricity, and gas.
Every house looks different. There can be various different types of houses available at the same duty station. The best source for pictures I’ve found is to look at the different communities online that you like. Then you can join Facebook groups for those communities. There will usually be some friendly people willing to share pictures around there home. I’ve even received a video walk-through before!