Military Tips

Advice on military life, real estate, finance, education, and deployments

Casey

Bad Traffic at your Next Base? Decrease your Commute Time by Doing This

by

Commute times in big cities can change wildly based on time of day. For instance, in Hawaii a commute that takes 15 minutes at 10AM can easily take 40 minutes at 6:30AM. Knowing how traffic affects your commute is critical to deciding where to live at your next base.

Enter Google Maps. They have a feature that shows traffic delays based on time of day. So you can see in the example that traffic on H-1 will be at its worst at 6:30AM. If you commute on H-3 you will rarely encounter traffic. This could make housing in that area more appealing.

To change the day and time, adjust the options in the text box in the lower left portion of the map.

Google Maps Traffic on Mondays at 6:30AM

5 Pitfalls of Owning a Home in the Military

by

Pitfalls of Home Ownership in the Military
The Money Pit with Tom Hanks

Purchasing a home while in the military is easy.

The VA will help you get a loan with no down payment. Realtors will show you all over town and not mention anything about commission (that’s the seller’s responsibility). Overall, it’s good to be a buyer.

But before rushing into a home purchase, be mindful of these five pitfalls:

1. You will probably not break even in three to four years

Before I purchased a home, I envisioned paying my loan over three years, then selling before moving to a new base. I figured that paying a loan for three years would surely give me room to make a profit. With the VA funding fee and realtor’s commissions this is not the case.

Your realtor probably told you not to worry about commission and other fees because they are paid by the seller.  So what happens when you are the seller? A real estate agent will likely charge you 5% of the selling price to sell your home.  Let’s say you bought your house for $180,000. We will assume you paid cash for the VA funding fee of $3,870.00, but that is often financed. After four years with a 30 year loan at 6% interest, you would have a balance of $170,000.  If you sell your home for $180,000 you’ll pay your realtor a $9,000 commission!  That leaves you with $1,000 from paying down the home.

The bottom line is that you will have little room for bargaining if you try to sell your home in four years. Almost all the home owners I’ve met in the last couple years have rented their homes rather than sell them. So be prepared to own and rent your home out for the long haul.

2. Property taxes may increase if you rent your home out at the end of your assignment

Many states reduce tax rates while a home is “owner-occupied” but then increase the tax rate once the home is rented.

For instance, in South Carolina a $200K home costs about $1,200 a year in property tax. That increases to around $3,500 when the owners move out. In this scenario if you rent your home out you’ll need to account for an extra $200 per month on top of your usual mortgage, property tax, and insurance once you move and rent your home out.

3. The VA fee takes takes a year to pay off

A VA mortgage saves you money by avoiding mortgage insurance (PMI). However, the VA charges 2.15% of the purchase price to facilitate a loan. Going back to our first example, our $180,000 home has a funding fee of $3,870. Your bank will gladly roll that into your loan, but it will take the first year of payments on your home to pay it off.

4. Your home may sit empty if you can’t sell it before you PCS

Depending on the market, realtors will tell you that your home should sit on the market for at least three months once it’s empty to try and snag a buyer. Those three months are expensive. You have to pay your mortgage, insurance, property tax, plus keep the electricity and water turned on.

You always have the option to rent. But if you only want to sell, be prepared to let your home sit empty for a bit.

5. Your home may have damages you didn’t know about when you purchased

The home inspection processes should protect you from this pitfall. But I still hear about it happening. If you let something slip by when you purchase the home, a savvy buyer will likely find it when you sell. Ensure you get a good home inspection completed before you buy a home.

While I’ve listed some pitfalls, owning a home still has its advantages. Paying a home off over the years is a great way to build up a nest egg for retirement. It also provides tax incentives that will help decrease your annual tax bill. Make sure you purchase a home aware of the possible drawbacks.

How to Negotiate a Lower Rent for Your Next Home

by

Home owners like military renters. Why? Because they greatly reduce the risk of them losing any money. A home owner is scared that 1) the renter will stop paying rent and it will take months to evict them or 2) the renter will tear up the home and will not be able to cover the repair costs when they move out. Home owners know that military cannot walk away from debts without repercussions. That’s why, as a military renter you should take advantage of this and negotiate a lower rent.

My track record on this is solid, as I’ve rented very nice homes at each base I’ve been to, and have lowered my rent by about $200-$300 every time. I normally look for homes that are slightly out of my price range, then negotiate down to my BAH. Nicer homes have a greater margin for negotiation as many homeowners expect to take a small loss in return for decreased risk.

As a homeowner myself, I recently rented our home for a reduced rate to a military couple because I saw the advantage in having someone stable and accountable in my home.

To aid your negotiations, offer to sign a three year lease. This is appealing to the homeowner, but is also an advantage for you. We move enough… the last thing we want to do is move in between a tour. Locking in your lease for three years gives you fixed rent and less worry that you will be kicked out in between lease periods.

When negotiating your rent, you really have nothing to lose. The worst the home owner can say is no. Before saying no they will likely come back with a counteroffer.

There is only one scenario I can think of where you should not try to negotiate. Certain markets have neighborhoods that are highly desirable. For instance, Mililani in Oahu, HI, is one because it is known for good schools. Many of the homes there will having waiting lists to tour the home when it’s available for rent. If you see a situation like this, then you need to jump on a house when you really like it. However, these neighborhoods are an exception, and will reveal themselves when you start calling around.

In summary, do not underestimate your value as a potential military renter. Get out there and make a deal.

Ginkgo Hills Subdivision

by

Ginkgo Hills is a subdivision off of Old Camden Highway, just 10 minutes (5.5 miles) from Shaw AFB. The neighborhood is fairly secluded. It is full of custom-built brick homes, from around 1,600 to 2,200 sq ft.  Homes start at $150K. Most are less than 10 years old.

Great for Families

Military really like this neighborhood due to it being very family-friendly. Every time I drive through this neighborhood I see parents and kids walking or playing on the streets.  There are two entrances to the subdivision, but there is no through-traffic.

The yards are very large, with the average lot at .6 acres. The homes are built far back from the street and have long driveways. A majority of the homes in Ginkgo Hills have fenced-in back yards.  About half the homes have back yards that back up against a tree line, such as the house below.

Ginkgo Hills Home
Typical house in Ginkgo Hills
Ginkgo Hills yard
The yards in Ginkgo Hills are very large

Bonus Room

One feature you will find in many South Carolina homes is a bonus room.  This is a finished upstairs bedroom, normally placed above the garage in the attic space. A majority of the homes in Ginkgo Hills feature bonus rooms.

Bonus rooms come in different configurations.  It may include heat and A/C, or just heat.  The A/C system is normally controlled separately from the main house A/C.  It may have a bathroom, closet, or just be a big room.

These rooms make great “in-law”, guest, or hobby rooms as they are very private and are separated from the downstairs living area. Of course, they can also become a catch-all storage area for your house if you’re not careful!

Shopping and Recreation

Ginkgo Hills is about 8 minutes from Sumter restaurants and stores. Columbia is about 45 minutes away. You’re especially close to Village at Sandhill in Columbia, which is an outdoor shopping area with lots of great stores and restaurants.

Gingko Hills Map and Streets

The following streets are located in Ginkgo Hills:  Maidenhair Ln, Kaempfer Cir, Temple Rd, Silverfruit St, Fossil Ln, Baigo Ct, Biloba Cr, and Herbal Way.

Ginkgo Hills Map and Streets
Ginkgo Hills Map and Streets

Local Property Taxes

South Carolina has some of the best property tax rates in the country. Thus, you can expect to pay around $900 in annual property tax for an 1,800 sq ft home in Ginkgo Hills.

Shaw AFB Overview

by

Shaw Air Force Base is located in the town Sumter, SC.  Sumter is a fairly small town, and you may have heard some bad things about it. But let me tell you why it’s not so bad:

  • You get a lot of house (and yard!) for your money. If you have kids or pets and want a large yard for them to move around in, you’ll find many options in Sumter that suit your needs.
  • Property taxes are very low. Speaking of taxes, did you know that military can buy a car in South Carolina tax-free? We purchased a new Honda minivan and paid only $34 in registration and taxes.
  • The town is very friendly towards military
  • You are a short drive from some nice cities, including Columbia (45 minutes), Charleston (1.5 hours), Myrtle Beach (2 hours), and Savannah, GA (2 hours)