Deciding what to do with your house when being deployed can be a difficult decision. Many active-duty military members sell or rent their home before deployment. Here are some pros and cons to consider before selling or renting your home.
Frequent deployments are often a part of military life. If you’ve received your deployment orders and you own your home, you may be left wondering what to do with it. Two of the most common choices are to sell the home or rent it out for extra income.
This is not an easy decision and usually depends on each service member’s situation. Here’s a look at some of the important factors you’ll want to consider before selling or renting your home.
Should I Sell or Rent My House While Deployed?
Selling your home is a permanent decision, so be sure to do your research and think it through completely. How much money you’ll profit is a big factor in selling your home. It’s valuable to know your potential home sale proceeds before you list your home for sale.
You’ll also want to consider factors such as how long it might take you to sell your home and whether you have time to deal with the hassle of putting it on the market.
If you’re leaning towards renting out your home, consider how much rent you’ll be able to charge and how that compares to your current mortgage payment. Also keep in mind whether you want to put the time and effort into finding renters, collecting rent, dealing with repairs or property issues and timing the lease for when you’re scheduled to return from your deployment.Pros and Cons of Renting Your Home
| Pros | Cons |
|---|---|
| Earn extra income | You’ll be a landlord |
| Build home equity | Property upkeep |
| Protect against property value decreases | Property management companies (optional) |
| Pay off your mortgage faster | Unexpected costs |
Pros of Renting Your Home While Deployed
Second Income
Renting your home allows for an extra source of income. If you’re able to find a reliable renter, this could help offset the cost of your mortgage and possibly provide some extra money.
Build Equity
If you’ve only owned your home for a short period of time, it might not make sense to sell. In this case, it may be more beneficial to continue building equity by renting it out, especially if you will be deployed for an extended period of time.
Protect Your Property Value
While the exact value of your home is subjective, it's important to know that a drop in property values could make renting more beneficial than selling.
If your home's value has decreased since you purchased it, it may be worth considering renting it out until home prices start to bounce back. Waiting for the market to be more favorable can be a great way to maximize your home sale proceeds when you are ready to let go of the property.
Pay Off Your Mortgage Faster
Using a tenant’s rent payment while also collecting Basic Allowance for Housing (BAH) can help pay off your mortgage faster. Even if you don’t end up staying in the property long term, it’s a great way to build equity in your home.Cons of Renting Your Home While Deployed
You’ll be a Landlord
Renting your home while in the military isn’t always easy. If you’re going to lease out your home, you’ll need to take care of your tenants, which requires time and effort. In the long run, you may find this does not fit into your active-duty schedule.
Property Upkeep
Even if you do your due diligence vetting renters, there will inevitably be some repairs, maintenance and damages to the property. It’s important to have everything sorted out on who will handle any necessary repairs. As an active-duty military member, there’s a chance that you won’t be able to handle tenant requests right away. If you plan to rent, make sure there’s someone else who can take care of the property when you’re not available.
Property Management Companies
If you decide to rent out your home while you're deployed, you may consider hiring a property management company. A property management company can be a great way to mitigate some of the time constraints and property work that comes with renting your home. However, doing this will ultimately cut into your profits to pay the company.
Unexpected Costs
In addition to unexpected emergencies like a burst pipe or a broken toilet, you may also have to deal with various fees and liabilities that you hadn’t accounted for. This could include the cost of evicting tenants and covering the mortgage payment if your home ends up being vacant for any length of time, especially if your deployment ends up lasting longer than expected.
Pros and Cons of Selling the Home
| Pros | Cons |
|---|---|
| Cash out home equity | Potential profit loss |
| No property management | Could be a slow process |
| Home sale exclusion | Diminished VA loan entitlement |
| VA loan assumption | You’ll need to go through the homebuying process again |
Pros of Selling Your Home Before Deployment
Cash Out the Equity on Your Home
There’s something to be said for keeping things simple. Selling your home allows you to take out any equity you’ve built up in addition to pocketing the BAH you receive while you’re deployed. It also saves you the trouble of finding someone to take care of the home while you’re gone
No Property Management
One of the benefits of selling your house instead of renting while you're deployed is that you won't have to worry about managing a property with tenants. This can be a great relief in terms of stress and time, especially if you're deployed to a location that's far from your current home.
Home Sale Exclusion
If you decide to sell your home before deployment, you may qualify for the home sale exclusion. This allows you to exclude up to $250,000 of profit from your income taxes if you file as a single taxpayer or up to $500,000 if you file a joint return with your spouse. Keep in mind this only applies if you’ve kept the home as your primary residence for at least the past two years.
VA Loan Assumption
A VA loan assumption allows another borrower to take over payment of your existing mortgage, even if they aren’t a Veteran, active military service member or eligible surviving spouse. This option could potentially save you money and make your home more attractive, resulting in a faster sale or higher price.
Another big benefit of VA loan assumption is your VA entitlement could be restored. However, this can only be done if the person assuming your loan is also a Veteran with enough entitlement. Otherwise, you’ll need to repay the loan in full in order for yours to be restored.Cons of Selling Your Home Before Deployment
You Could Potentially Lose Money
When you sell your home, you're losing an investment opportunity. Even if you find a buyer quickly, you'll only get the current market value of the home — which may not be what you could make by selling it in the future. If your home is worth less than what you owe on your mortgage, it's possible that selling won't even cover your outstanding balance. In this case, selling would actually cost you money.
It Could be a Lengthy Process
If you’re in a time crunch before your deployment, selling your home may not be the best idea. Depending on the current market conditions and the area where you live, getting a quality offer on your home might take longer than expected.
You Could Lose Your VA Loan Entitlement
If you used a VA loan to purchase your home, your VA entitlement will be tied to the property until you repay the loan in full. However, if you end up selling the home for less than you originally paid for it, this could affect your ability to restore your entitlement.
However, short selling your home before a deployment is not recommended. You’ll still be receiving BAH plus any additional deployment pay throughout the time you’re away. In this case, it’d make more sense to keep the home unoccupied if renting isn’t an option.
You Will Need to Go Through the Homebuying Process Again
If you want to sell your home before deployment, you should be aware that you'll need to go through the homebuying process again once you come back. It could be difficult finding an affordably priced home that meets your needs, especially if you're not familiar with the current market conditions. You may also find that you're not able to get the same interest rate on your new home that you had on your previous home.
Finding a home and getting approved for another mortgage is not something that should be rushed. That being said, if you decide to sell your home before deployment, you’ll need to plan where you’ll be living once you return.
Ultimately, determining whether to sell or rent your home depends on the homeowner’s situation. As you begin preparing for deployment, take the time to think through each of these pros and cons, weighing them carefully before making your final choice.
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