He bought the second house in the Miami area in 2014 as a foreclosure also, and that has done just as well as the market recovers there and home building resumes. He said he plans on continuing to buy houses wherever he goes if the market is decent and build a little real estate empire to help with retirement.
Stealth, as a realtor I would give him this advice. Don't start littering houses around the country. Sorry for going off the beaten track, but felt the need to share.
Here is why impo.
1. Very few renters will maintain the home like the owner.
~ Landscaping is always impo the biggie. Homeowner will make sure shrubs and trees are trimmed, driveway and sidewalks are edged.
~~ Curb appeal is the 1st thing buyers notice when driving through a neighborhood. His tenant maybe great, but if the other renters aren't than the house price for the ones selling it may decrease
~~~ Every base we lived at had certain neighborhoods/areas that military members drifted towards. In AK, Eagle River was known as base housing of the north. Simply because if you did not live on base you lived in Eagle River. In Goldsboro, there were about 5 neighborhoods that ADAF lived in. Why? Because see my earlier post....schools.
~ Interior updating
~~ Carpet is in their opinion the landlords cost. It gets nasty, oh well. The renter will not replace it, instead just accept it. The person buying the other rental home in the neighborhood will low ball because they need to replace the carpet. Hence, the price in the real estate market goes down, just like the curb appeal.
2. Homes age and with age costs are much higher
~ A roof can cost months of rent to recoup.
~~ See above regarding tenants. They are not going to be looking to see if there is aging until most likely there is damage that needs immediate action...more money
~ How often do you check your hotwater heater to make sure there is no water leaking? A homeowner impo will pay attention immediately and watch it closely if they see water leaking. Tenant, not so much
... sees the water and moves on.
3. In military communities many put parameters in for the realtor.
~ Bullet and I always did. We wanted nothing older than 8 years old. We expected a 3 yr tour which meant our house would be in the 1o yr age range.
~~ As a realtor many of my clients that were buying new construction, wanted something in the 10 yr marker. That and the school district.
~~~ Also as a realtor if the home is equal in par, same size, same school district, etc., older homes sell for lower $$$ per sqft compared to newer. See above regarding age and costs.
4. Renters typically will give 30-60 day notice, but if he decides to sell after the tenant leaves he may miss the primetime market season.
~ Renters tend to make it difficult for realtors to enter the home with prospective buyers compared to actual homeowners. They will say no that time does not work for us, and due to time constraints with the realtors buyers they will most likely skip the house altogether. Leaving the home on the market for more days. Longer on the market the more likely buyers think there is something wrong with the house, and the higher the chance of lowballing.
~~ Again, this is not saying his house per se, but another rental in the area.
5. He is lucky right now due to the market recovery, but impo every military member should think long term...just like the starter loan.
~ DS is married with a baby and 2 dogs. When he 1st got the C130J, USAFE or PACAF were his top choices for assignments. Now it is stateside, in turn that means he will rotate back and forth between Little Rock or Dyess unless Big Blue decides otherwise as a pilot.
~~ Bullet flew the 15E. The rule of thumb was typically...Seymour rotate to Lakenheath rotate back to Seymour...repeat again unless you did something amazing to get to Elmendorf. .. i.e remote.
6. Taxes
~ Don't even get me started on how complicated it becomes if you rent for a couple of years and than sell the property.
~ Sell now as your primary residence and reinvest in the next within 2 yrs you can get a pass. Rent for yrs and now you are paying capital gains, plus you have to deal with depreciation issues. Trust me on that.
If he is like our DS and Bullet with expectations of rotating back there than landlord is a great option, BUT impho as a realtor if he never expects to return, than sell when they leave. He can take the gains invest in a different way. IE: Instead of buying in the young O3 neighborhood he can buy in the O4/O5 neighborhood, but still have the mtg of an O3.
Again, sorry for the novella, but as a Mom with a DS that purchased as an O2, I felt the need to address this directly when you start thinking about how much impact this loan can have on your life long term. Luckily, Stealth's, Christcorp, Fencers and my DS have used it wisely (long term philosophy) and I highly doubt anyone of them would say they regretted the loan. Than again, none of them to my knowledge went off and used it all on a car. They all invested some way a portion of the money.
PS: While we are at it. Tell them as soon as they can get the AMEX platinum. AMEX will charge the fee and reimburse once you show you are AD. The platinum has great bennies, and if they are fiscally responsible than it is a better option.
~ We used it everything. Food, gas, cell phone payment, etc. Flew 1st class round trip to Italy for a family of 5 free, because everytime we used it we wrote that in our check registry as if we had used the debit card.
~~ I believe USAA offers the AMEX