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I am in the Air Force and have an assignment to Ellsworth AFB in Rapid City South Dakota. I have no idea how long I will be stationed there. It could be as little as 2 years if I get picked up for an overseas assignment or 4+ years if I do not. I have lived overseas for 6 years and have spent over $120K in rent.
It looks like I can buy a home cheaper than renting in RC. They do not have much to offer as far as renting goes and I do not want to live in an apartment. $1200 is the average price for the rental homes available (in the area I would like to live). I have 11 years left in the military and do not wish to wait that long to buy a house. However, I do not want to end up in financial ruin either.
From what I have read, the housing market in RC is stable and has not been hit hard by the housing crisis- if at all. Ellsworth AFB is here to stay and has no chance of closing due to a new unit that will arrive in 2012.
If I rent a place for 2 years, I will have spent $28K in rent. If I rent for 4 years, I will have spent $57K in rent. Typically, if one sells their house after 2 years, can they break even? If I did, that would be like putting $28K in my pocket or the equivalent to living rent free? I do have a feeling I will be there for 4+ years, though.
The thought of buying a house as a military member scares the crap out of me. I have seen many members do this and walk away with a sizable nest egg. However, lately, I have seen the opposite.
I saw a post about the USAA referral program and has made me reconsider using them. I would not give up that much of my commission if I were an agent. I know nothing about the home buying process and would like some assistance. I would appreciate it if you could help me with some questions.
I live in Germany, how should I go about finding a good agent?
Is a real estate agent the only thing I am looking for? I see people talking about buyers agents and other things I am unfamiliar with.
Should I get a pre-approved loan with USAA or wait until I find my house/use different bank?
I will be using my VA loan, should I find an agent that works with military members or does that not matter?
Is their a different process, agent wise, if I buy a foreclosed house?
What is a short sale?
Do you think it is too risky to buy a home under my circumstances?
Does anyone know anything about Rapid City or the Black Hills housing market?
Any good book recommendations for FTHB?
Thans for taking the time to read my post. I look forward to you replies!
Question #1- Would you be comfortable renting out the home for a couple years when you PCSed away from South Dakota? There's effectively a 10% transaction cost when you do sell the home. Mortgages are structured so you're paying a huge amount of the interest and very little principle in the first coupel years. So unless you luck into a freakishly incrasing market (which can happen. See some other parts of the region where energy resources have been discovered) and are going with a 30 year loan, two years is generally not enough time to make it worth it.
But if you're open to being a landlord afterwards, it might make sense to buy with the idea of renting the house out afterward since it sounds like you could break even from a cashflow standpoint, even with management company and maitenance costs.
Thanks beachmouse! Yes I would consider renting until I had enough equity. That is scary, though. I wish I knew how long I will be stationed there. Thanks for the 10% tip on the transaction cost. I need to do some research. I feel totally helpless!
Wow! Tons of questions! That's great that you are looking to educate yourself and not end up in trouble a few years down the road.
First, start going to the forum here that handles local Rapid City posts. Do a forum search for the area you are concentrating your home search and see who is answering the questions of other people relocating, just like you! Often the Realtors will be answering questions and you can get a real feel for what they know in that market area.
On the loan side of things, I would wait until you are pretty close to PCSing before you start getting pre-approved. It is my understanding (speak with a lender to confirm) that if you have maybe 3 mortgage inquiries in a 30-day period, it will not hurt your credit, because they realize you are shopping for the best rate. Definitely check with USAA, but then get some quotes from lenders in the area you are going to buy. And in the event you end up with new construction, many builders will offer incentives if you go with their "preferred" lender.
Also, you asked about the USAA Referral Program. I work for a brokerage that is a preferred provider for USAA, and you're right, it is a big chunck of change they take. The concept is that they have high standards for the agents that qualify to work in the program, so you should come out just fine. Just remember, if you don't strike up a good repoir with the Realtor, ask to be assigned a different agent.
On a short sale... that is where a homeowner owes more on their mortgage then they can sell the home for. In theory, the bank has given them permission to sell the home at a loss. Since they have done that in theory, you would think a short sale would be a fairly easy transaction. NOT!!! You will definitely need to have some short-term housing lined up on the installation if you want to go that route. Now a foreclosure will often go much faster because the bank already owns the home.
On a VA loan, not much difference. My husband and I are currently on our third VA loan and have never had a problem (once you retire, if your disability rating is high enough, you do not have a funding fee).
Okay, I think that is a good start to your questions. Let me know what I missed!
...On a short sale... that is where a homeowner owes more on their mortgage then they can sell the home for. In theory, the bank has given them permission to sell the home at a loss. ...
Perhaps in theory, but usually not in reality. Most short sellers list their home for sale before getting bank permission. It's the getting permission/approval part when they get a contract that can take a very long time, and the answer may be no approval. As onevthoki said, be sure you have alternate living arrangements if you try for a short sale.
Since you are military you should check out to see if you are eligible for the 8,000 tax credit there is a provisional clause in there for military which gives some military members an extra year.
Don't forget that you already have a network in place in Rapid City -- your new unit. Ask some of them who are the most successful and military friendly real estate agents and mortgage brokers in that market. That's a great start.
Also, I would strongly suggest talking to USAA. As an ex-servicemember myself, I have been very happy with them for several decades.
I am in the Air Force and have an assignment to Ellsworth AFB in Rapid City South Dakota. I have no idea how long I will be stationed there. It could be as little as 2 years if I get picked up for an overseas assignment or 4+ years if I do not. I have lived overseas for 6 years and have spent over $120K in rent.
It looks like I can buy a home cheaper than renting in RC. They do not have much to offer as far as renting goes and I do not want to live in an apartment. $1200 is the average price for the rental homes available (in the area I would like to live). I have 11 years left in the military and do not wish to wait that long to buy a house. However, I do not want to end up in financial ruin either.
From what I have read, the housing market in RC is stable and has not been hit hard by the housing crisis- if at all. Ellsworth AFB is here to stay and has no chance of closing due to a new unit that will arrive in 2012.
If I rent a place for 2 years, I will have spent $28K in rent. If I rent for 4 years, I will have spent $57K in rent. Typically, if one sells their house after 2 years, can they break even? If I did, that would be like putting $28K in my pocket or the equivalent to living rent free? I do have a feeling I will be there for 4+ years, though.
The thought of buying a house as a military member scares the crap out of me. I have seen many members do this and walk away with a sizable nest egg. However, lately, I have seen the opposite.
I saw a post about the USAA referral program and has made me reconsider using them. I would not give up that much of my commission if I were an agent. I know nothing about the home buying process and would like some assistance. I would appreciate it if you could help me with some questions.
I live in Germany, how should I go about finding a good agent?
Is a real estate agent the only thing I am looking for? I see people talking about buyers agents and other things I am unfamiliar with.
Should I get a pre-approved loan with USAA or wait until I find my house/use different bank?
I will be using my VA loan, should I find an agent that works with military members or does that not matter?
Is their a different process, agent wise, if I buy a foreclosed house?
What is a short sale?
Do you think it is too risky to buy a home under my circumstances?
Does anyone know anything about Rapid City or the Black Hills housing market?
Any good book recommendations for FTHB?
Thans for taking the time to read my post. I look forward to you replies!
Hmm... sounds like you have been doing a lot of thinking but working in a military installation myself and seeing sailors and other branches come and go, the ONLY ones who buy homes when they PCS are the ones who have four year orders. The rest just collect their BHA (or BAH??) and live rent free basically until they get orders like that or get out. I think it still sounds like your situation is very up in the air and before I'd start house hunting, I'd be sure I was going to live in one area a minimum of four years.
Just my own personal opinion....
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