Military move- rent or buy

[moneymaker]

Happy 4th everyone!

We will be moving to Detroit area in the very near future and are undecided about renting vs buying in that area. We are leaning more towards renting because we will be in the area for a max of 3 years. Some of the things on my mind:
1. I really don't know the market in that area. I own 2 homes in Virginia and rent them out, but the Virginia market seems to be much different.
2. Seem to be a lot of risk if I buy in Detroit. Even with low interest rates, I would have to have considerable appreciation in 3 years just to break even once you account for closing costs and 6% rea estate agent fees; however, I have never rented and it definitely feels like I would be throwing money away to rent.
3. Buy in Detroit and rent out when I move- I don't know the market at all though.

I'm interested to get any feedback I can on the Detroit area and others opinions on renting vs buying. Thanks!

[REWahoo]

I know zilch about the Detroit area but I think I'd rent in your situation - too many unknowns.

[Sarah in SC]

I have a friend who is renting in Detroit. It has taken him several years there before he is comfortable enough with the market to even start looking to buy.
I'd rent.

[braumeister]

Speaking as a retired military guy who made a LOT of moves, I definitely would rent. You would never break even selling after three years, and keeping it as a rental is a complete nonstarter. There is lots of surplus housing there.

[JDARNELL]

As a young military guy back in the 90s I rem the words of my first Commander he said never buy in a place you have no intentions of living long term. (He got caught in a collapse in So Cal) Served me well as I never bought in a place I would not live long term. Once I got to one of those places I loaded up.

JDARNELL

[Senator]

If I was in the military, I would definitely rent or live in base. Rent only the size residence you need. Scale up if you have to, when you have to.

Rent a place for less that the BAQ amount. Pocket the tax-free difference.

If you buy, you will likely have to sell, or hire a property manager to take care of it for you. Selling involves a realtor expense, and a property manager in a whole can of worms.

[aja8888]

I lived and worked in Detroit for four years and lived in Southland, Westland and Livonia areas. Real estate is gone to the dogs there, especially in the areas surrounding the City of Detroit limits. I would rent for the three years you are planning to be there.

[meierlde]

One issue is where in the Detroit area will you be stationed, as it does make a difference, in the city, the near suburbs or the far suburbs? As with most places school districts make a difference, so avoid the Detroit city schools in all cases as they are being restructured and going to shrink greatly (they went broke this year and the state had to restructure the district). Looking 3 to 4 suburbs out from the city things are different.

[Bamaman]

Detroit city looks like a bombed out war zone, and it's certainly not a place to buy--or even live in. The standard of living is like a 3rd world country--or Memphis or East St. Louis or Baltimore--but even worse.

Location depends on where you're going to be working.

All my buddies that worked at Ford lived 20 miles or so west of Dearborn. I have one friend remaining living in Dearborn, and he'd have to sell to an Iraqi to get out of there. I still don't understand why he's in the are.

How about getting a place over in Windsor--where people walk the streets without worry?

[samclem]

During our first assignments we tended to buy homes if we expected to be in place for 3 years (we didn't want to "throw away" the money paid in rent). We wised up fairly quickly after having to sell in a hurry, and thereafter leased whenever we PCSed--tried to get a long lease if we could because I did not want to have to move mid-assignment. It's a great feeling to get orders and know you don't have to sell a house along with all the other things that come with a change of assignment--just give notice to the landlord along with a copy of the orders.
Sometimes buying can work out, but mostly it does not. And buying with the expectation renting the house out after you move is especially dumb suboptimum. A house you'd want to live in is seldom the same house that makes the best rental. And, you generally are competing against people who live in a community and who know the real estate market and the rental market. Also, you typically have a very limited amount of time to find and buy a house--everything is stacked against you.
If you >need< to buy a house (due to rentals being unavailable in the school district you need, you have a pet and can't find a rental, etc), then you may have to buy, but it's not a great situation.
In one assignment we lived on base and paid the money for a private school for our daughter. That proved to be the best option.

[Meadbh]

In general, professionals recommend (and I endorse) the five year rule for buying property. It makes little economic sense to buy and sell within three years, unless it's an area on the upswing. I don't believe Detroit fulfills those criteria.

The Five Year Rule for Buying a House

There are numerous "rent versus buy" calculators on the internet. If you play with them you will see that the monetary benefits of buying accrue with time spent in the home.

[EpicRider]

Recommend rent; unless you really have some time to research the local housing market. I am completing 26 years of active duty military service and only purchased a home three times. We purchased a single family home in El Paso and owned it for three years, 2003-2006 and did well, but the risk was low based on housing prices at the time, location, schools, etc.... We also have done very well on our San Diego purchase, but location and timing were (2011-2016) the key factors. We did not purchase either with the intent of making money, just really wanted to break even and have a good quality of life for the tour. I am completing my last couple weeks before terminal leave/retirement and we are moving to our third home in Colorado Springs; we hope to be in it for well beyond five years.

Good luck in your next tour and with your housing decision. :-)

[Sunset]

Quote:

Originally Posted by Bamaman Detroit city looks like a bombed out war zone, and it's certainly not a place to buy--or even live in. The standard of living is like a 3rd world country--or Memphis or East St. Louis or Baltimore--but even worse. Location depends on where you're going to be working. All my buddies that worked at Ford lived 20 miles or so west of Dearborn. I have one friend remaining living in Dearborn, and he'd have to sell to an Iraqi to get out of there. I still don't understand why he's in the are. How about getting a place over in Windsor--where people walk the streets without worry?

Rent.
Unless you want to buy a house in Detroit for 10K and abandon it when you leave.
The city is literally bulldozing down square blocks of housing when they can afford to do it, to reduce the abandoned housing dangers (gang houses, murder spots, fire, eyesore, collapse danger, etc).

I stopped driving through Detroit about 5 years ago as it is in terrible shape.

[davismills]

Retired military here. I bought one house in Charleston SC at the mid point of my career and received orders to move two years after the purchase. I was made a reluctant landlord for 13 years. Luckily, I only missed two months of rental payments during that time and doubled my money upon the sale of the property. Location, location, location always applies. I would rent versus buying in Detroit.

[travelover]

Quote:

Originally Posted by Bamaman Detroit city looks like a bombed out war zone, and it's certainly not a place to buy--or even live in..........

Quote:

Originally Posted by Sunset ..........Unless you want to buy a house in Detroit for 10K and abandon it when you leave...........

Lifelong metro-Detroit resident here. I seriously doubt that the OP is literally intending to move to the city of Detroit, proper. The city is ringed with suburbs that offer housing from modest bungalows to multi-million dollar mansions.

If the OP want to PM me, I can give feedback as to where he /she would likely find a good fit.

[moneymaker]

Quote:

Originally Posted by travelover Lifelong metro-Detroit resident here. I seriously doubt that the OP is literally intending to move to the city of Detroit, proper. The city is ringed with suburbs that offer housing from modest bungalows to multi-million dollar mansions. If the OP want to PM me, I can give feedback as to where he /she would likely find a good fit.

Exactly. I will be working in Inkster, which I already know is not a good area at all. We are looking in the outer suburbs near Plymouth, North Canton, Novi, Northville, Walled Lake. The rentals that we'd be comfortable in are definitely priced much higher than here in Virginia, but they are nice homes and in great schools from my research I've conducted so far.

There is definitely homes for sale than there are for rent, but I think that's with most areas. I'm definitely 95% sure that we will rent.

Thank you all for taking the time to provide feedback.

[nash031]

Going on 17 years active duty here... unless you plan on moving back to Detroit at some point, and are thus looking for your permanent home now, I'd rent. Even if I were moving back to Detroit, I'd rent, save, and buy whenever I got back there once the needs were more clear cut.

I've purchased three properties while on active duty. The first one I turned around in 2 years and made $60,000 a couple of years before the east coast bubble burst. I used that $60,000 as a down payment on the next condo which I turned around in 2 years losing $30,000.

Now I'm on house #3 which we've been in for five years, and will close out at least nine years to my 20 there.

Knowing what I know now, I would've rented the first two places. I was lucky to sell the second one when I did and not either get stuck with a property in a saturated market it while living on another coast nor take a bigger loss due to the bubble. I'd rather be smart than lucky...

[travelover]

Quote:

Originally Posted by moneymaker .......... We are looking in the outer suburbs near Plymouth, North Canton, Novi, Northville, Walled Lake. .........

These are all good areas and I'm currently trying to sell my house in one of those cities. To get lower rents you'll need to down shift a notch and look in Wayne, Garden City, Westland, Dearborn / Dearborn Hts or go farther out, like to Van Buren Twp or Brownstown.

[HawkeyeNFO]

Grew up south of Detroit, so I'm a bit familiar with the area, and miss my Faygo redpop. Like Nash, I'm holding on to the 3rd house I bought while in the military. I've been much luckier though, selling the first after 2.5 years for $36k more than we paid, and then buying the 2nd home in 2003. That one we lived in for about 5 years, and then rented it out for a small profit. Sold it just a few months ago for nearly $200k more than we paid. Sounds great, but the costs of buying and selling homes are quite prohibitive, and as I said, I think we just got lucky. Metro Detroit market is probably great for landlords, but it doesn't sound like that is in OP's plan. If the plan is one tour and then moving on, renting is the way to go in the Detroit market.

[friar1610]

I went on active duty in 1967 and retired in 1996. Back in the day, most of us bought even if for only 3 years. With rapidly rising home prices in the early 70's - late 80's it was relatively easy to make a few bucks on each sale. But from what I understand these days it's probably not a good idea unless you can "homestead" in an area (e.g., Norfolk or San Diego for the Navy) and/or have a very high probability of returning to an area in the future while renting the house out in the interim.