Unlocking your Basic Allowance for Housing

I am a numbers guy.

When I first looked at the prices of real estate in Key West, I couldn't find the value I was looking for.  Not only were the places small, but insurance costs were sky high making monthly payments even higher.  For the first time, I was going to live on base.  I thought the cost of living in town was too much to spend.

Over a year later we are here now and enjoying some of the benefits on base.  Even though we enjoy the neighborhood, a few things in December had me back to the numbers again.  I have been watching the market and am familiar with many of the neighborhoods now.  Real estate is up 8.6 pct over the year.  Friends were discussing BAH is up.

For those unfamiliar, BAH is an untaxed allowance military members receive when they live out in town.  It is based on the local rental market, which is quite high here.  All these factors, in addition to some additional capital I pulled out for a deal that didn't happen had me consider a new scenario, home ownership.

As always, back to the numbers.  I started to find duplexes that my BAH would cover when putting 20 pct down and the additional rental income would supply good returns on my downpayment.  This started to look better than other investments I considered based on the power of unlocking my BAH.

While we looked at many duplexes and made a few offers, we found ourselves in a new position.  While we always consider buy and hold as an additional exit strategy, this time we found a place to purchase strictly based on future appreciation.  The details, reasons, and how that turns out will all be covered in a future case study.  The point of this blog is to remind military members of additional powers of purchasing the hold including BAH, no down loans, proximity to rental markets, and all of the typical advantages including tax benefits, appreciation, leverage, and principle pay down. 

Who's ready to unlock their BAH?