Planning on renting rather than buying.

[Michael Avillion]

My wife and I and newborn are being moved to El Paso for “at least” a 3 yr assignment with the Army. I am an Army physician and was told by “big Army” I could easily extend to a 6yr assignment if I desired. 

We have 30K in liquid cash as of now, 20K locked up in I bonds that I plan I selling July next year after maturing. 

Our plan is to rent for 1 yr, see how we like it, and if so then extend to 6yrs and buy. I had also thought about month to month but that may be hard to swing.  My worry is the time crunch at the end of our lease, so I would rent a place where I can go month to month at end, or get a 6 month and go month to month then. 

The market seems too unpredictable right now to buy and Id like to have more cash on hand as well. 

I appreciate any thoughts on our plan. 

[Eliott Elias]

I say buy now, there is opportunity everywhere. Market is slow this time of year and you want to be paying a mortgage rather than rent 

[Bryce Jamison]

I like your plan. Renting in an area before buying gives you a chance to see if you even like it. Maybe you like the area, but want to live in a better neighborhood 10 minutes down the street. You could even do a 6 month lease instead of year, but with a newborn 1 year could give you more time and not put you on the clock. Plus if you buy a house right away and want to leave after 3 years you may not have enough equity to cover realtor fees when selling especially if we don't see as much home appreciation over the next few years like we've become accustomed to.

Yes, paying rent pays someone else's mortgage down, but your essentially paying for flexibility. It's kind of like insurance.

As far as the ideal time to buy a house, I'd assume we continue to see home prices come down a few % points over the next several months, but as interest rates continue to rise I'd bet you see your mortgage payment be about the same. I don't know El Paso though, so this may not be true for the area.

Good luck!!!

[Marshall Leipprandt]

@Michael Avillion Good advice from @Bryce Jamison and I agree. Take that first year to really understand that area. Not only do you want to know if it is a place that you'd like to live, but you should also conduct extensive research while living there to determine if it is a market suitable for real estate investment in accordance with your family's goals. 

Yes, Texas is growing as a whole, but you can't assume the growth in those large metro TX markets will be mirrored in El Paso. TX is a huge state and owning real estate anywhere is a large undertaking - one worth taking a considerable amount of thought and analysis.

Lastly, I would 100% recommend using your VA loan if you do choose to buy. That will allow you to keep some of your liquid cash in a reserve account for your property as well as keep that cash on hand for your family.

[Michael Avillion]

Thanks for the advice. The wise thing is to wait. I eventually want to build a real estate portfolio (renting out properties to build wealth) and have read a lot about mistakes of people rushing into it. I won’t let that be me. 

Also, I would use the VA loan. The fact that I can have liquid cash leftover is very appealing.

[Joel Allen]

@Michael Avillion

Lots of good advice in the replies from @Bryce Jamison and @Marshall Leipprandt.

You're taking a patient approach to make sure the location is right to both extend your military time and kick off your real estate investing journey...nothing wrong with that.

What type of property would you like to purchase after a year? The VA loan allows for the purchase of a 1-4 unit property, which does open up the possibility of 'house-hacking' in which you live in one unit and rent out the remaining units. This fulfills the owner-occupied requirement while also allowing you to get your foot in the door of real estate investing.

Or is your intent to purchase a single-family home and then rent it out once you PCS away from El Paso?

[Terrell Garren]

Retired Amry vet here.  Also have 2 sons - one an Army Doc and one a Navy Doc. Both are renting and stockpiling savings.  Big Army will move you when Big Army needs to move you. Too much risk in timing. Buy when you are discharged or retire. You probably be able to pay cash.  Thank you for your service. 

[Michael Avillion]

Thank you for the advice. Our plan would be a single family home.

The advice about renting in the military makes a lot of sense. I agree, things can change quickly. That is why I am inclined to rent continually, unless there is a very compelling reason to buy. 

[Nick Barlow]

@Michael Avillion my biggest regret from 7 Active duty years as a commissioned officer is I didn’t buy at any of my 4 duty stations.

It doesn’t even matter if you don’t love your house-buy something the right size now and trade up when rates are lower or just sell when you pcs.

[Doug Spence]

@Michael Avillion Welcome to bigger pockets! I think its a good plan to rent for a bit while rates are high, to see if its somewhere you actually want to buy, and to familiarize yourself with the area. You have more than enough cash to cover your closing costs if you decide to use your VA loan, and depending on how well your bonds do, you might be able to buy conventional and save your VA loan for a future property.

We have family there (an Army surgeon and Army supply officer) and they purchased a home and really enjoyed living in El Paso. They're pcs'ing pretty soon though. 

There are lots of fellow active duty military folks on these forums who also invest in real estate, so you should keep us all updated on your journey. We enjoy helping each other out!

Good luck!

[Eddie Flores]

Welcome to El Paso Michael, hope you and your family find it to be a great place to live. Whenever you feel the time is right. The time crunch wont be so bad, if planned correctly. In the market were in, it takes about 25-35 days to close. So you'd want to be under contract to close your home at lease 30-45 days prior to your lease expiring. With the likeliness of using the VA loan, a down payment isn't required. Most sellers here are starting to provide closing cost contributions, as well almost all the builders are providing large closing incentives at the moment. This can helps you come in with minimal funds, then possibly refinance down the road when the rates normalize. Otherwise, it does make sense to take a lease 6 months to 1 year and learn the city before you commit. Feel free to shoot me a message or call me with any questions on the local market.

[Dave Skow]

@Michael Avillion- sound rational and good thinking as  you  will need some time to  get a feel of the area  and  opportunities

[Theresa Harris]

I think you have a good plan.  No point buying if you are going to move in a few years and if you don't know the different areas.  Make sure you leave yourself enough time before your lease is up to move and do any repairs you need to the new place.

[Rich Carey]

Rent, keep educating yourself, and save up more money for a future downpayment. I'm a military real estate investor, and I say don't rush it. Put some money into TSP too!

[Eliott Elias]

Rent where you live and use your cash to buy investment properties. Buying a primary residence won't give you a good ROI. Take advantage of this market and buy cheap

[Chris Seveney]

@Michael Avillion

Smart move. If you are not ready to be do not have FOMO and be like 2/3 of buyers recently who regret.

Home buying for yourself you want to make sure it’s the right home and one you can grow into. People who move a lot tend to not build personal wealth in their primary because they lose 10% to fees. So good job being patient