Buy or rent

[Jason Burton]

Hey BP I have been wondering if I should buy or rent. I'm being moved by my job to Fort Rucker, AL and I can't decide on whether or not I should buy or just rent. I will only be assigned to the area for a relatively short time (1 or 2 years; maybe only 6 months I won't know until I'm there). I'm eligible for VA loans so this would be a great opportunity to find a place to buy with no money down (OPM). The only problem is that I'm not that good at doing market research. I hear other military folks say the market there is "flooded" with rentals. How do I know if that is the case? I don't want to buy a property with the intention of renting it down the road only to realize that it won't rent. What's the best indication of a healthy rental market? Thanks for your advice in advance.

[Eleena de Lisser]

@Jason Burton What is your criteria for investing in real estate? Does Ft. Rucker, AL have the attributes that fit your criteria? Will there be sufficient demand from renters if you buy a house there that fits your criteria? Would the rent you could get cover your mortgage?

If you were not moving to Fort Rucker, AL, is that a market you would look at to buy rental property? If the answer is "no," then you shouldn't buy property there, you should just be a renter.

If you're only going to be assigned to that area for a short period of time, do you really want to take on the burden of owning a house and then having to property manage it long distance when you get transferred to another base?

I did a quick Google search about Fort Rucker, AL and it has an extremely small population, less than 5,000 people. That's not a large enough market to be able to count on a good pipeline of potential renters, in my opinion. If other military people who have lived in the area are telling you there are a ton of rentals there, that means there's more supply than demand, which means that renters, not landlords, have the upper hand. More supply than demand means property owners may have to lower their rent and/or their standards to attract tenants and lease a property. Is that the sort of situation you want to be in, especially long distance?

To answer your question about what are the best signs of a healthy rental market, of course it depends on the market and the demographics of that market. But generally, you want to look for job growth and/or population growth/stability and a variety of employers. You don't want to invest in an area that is reliant on one employer because if the company/organization cuts back, there go the jobs. Demographics are also very important. An area where young people are leaving, not moving to, is generally not a good sign, for example.

It sounds like you have to do some more research and establish what your criteria should be for investing in a market that serves your needs and meets your financial objectives.