should you buy a house at every duty station: Military Millionaire speaks out!

In the military, there is a popular idea that you should buy a house at every duty station. I don’t think this could be much further from the truth!

Sure, buying a house at every duty station seems like great advice—to people that started in 2010. But what about the service members who bought at every duty station in 2004 to 2008?

Obviously, there are great intentions behind this advice. I can certainly appreciate the thought, but as the saying goes, “The road to hell is paved with good intentions.”

I have been on both the beneficial and detrimental sides of the equation.

In 2015, I purchased a residence (in this instance, a house hack) at a duty station. Then I rented a residence (base housing) when I was stationed in Hawaii.

I purchased my first rental property while stationed in Missouri as a recruiter. A year later, I moved to Hawaii and have spent the last three years renting here while investing in property on the mainland.

real-estate-over-stocks

How to Analyze the Market When Deciding to Buy vs. Rent
Too many people get wrapped up in debating whether you should rent or buy your residence without understanding that it depends (mainly) on your market. One can argue until blue in the face that renting is dumb, but if the average home price is over $800,000 and won’t even come close to cash flowing, I would disagree.

The real question you need to ask is, “Does my market appear better suited to renting or buying?”

The market always dictates this decision for me—and it should for you, too.

Related: 4 Reasons Renting & Investing Beats Buying & Owning, Hands Down

How Much Are Homes in the Area?
The first thing to consider is the average purchase price in your market. If you’re earning less than $100,000 per year, you probably don’t want to buy in a market where the average home price is over $750,000.

The principal, interest, taxes, and insurance (PITI) alone could be $3,750 per month on a property like this!

That means you could spend $45,000 a year on PITI—almost half your income.

I think this expense should be enough to deter you. But just in case, remember that if you’re spending 45 percent of your annual income on a house, it will stifle your ability to save and build capital for future investments.

That means you are placing your hope entirely on appreciation, which in my opinion is a gamble (more to follow on that).
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My name is David Pere, I am an active duty Marine, and have realized that service members and the working class use the phrase "I don't get paid enough" entirely too often. The reality is that most often our financial situation is self-inflicted. After having success with real estate investing, I started From Military to Millionaire to teach personal finance and real estate investing to service members and the working class. As a result, I have helped many of my readers increase their savings gap, and increase their chances of achieving financial freedom!
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