As with many money mistakes, it seemed like such a good idea at the time. We had PCSed to Virginia and living in on-post housing wasn’t an option. We soon realized that the real estate market in our desired neighborhood with great schools was totally crazy. Rents were sky high, above our BAH (Basic Allowance for Housing). We did some calculations and realized a monthly mortgage payment would be lower than rent. And with a VA guaranteed home loan we wouldn’t even have to put down any money.
So we took the plunge and bought a house.
Oh. My. Gosh. What a mistake.
First of all, the house was the proverbial money pit. Even though I knew we were only going to be there for a few years, it was easy to convince ourselves that we simply couldn’t live with hunter green carpet, hunter green wallpaper with geese and chipped hunter green Formica kitchen countertops. We did the painting and wallpaper removal ourselves, but my husband, while a great guy, does not have the skills or the time to install countertops, so we paid a contractor to do it.
We also had to pay for quite a bit of normal wear and tear on the house. Roof shingles needed replacing. The deck needed repairing. The sliding glass door broke and we had to buy a new one.
Then 2½ years later as our time to PCS drew near, we made the discovery that the real estate market, which was supposedly stable and on the rebound in our area had actually dropped a little. A 10% drop in home value doesn’t sound too huge, but when you’re only paying the interest on your mortgage and haven’t built up any equity, that change in value makes a big difference. Not only would we not make any money on the sale of our home, we would have to take money out of our dwindling savings account to pay closing costs and Realtor fees.
Reluctantly, we made the decision to rent our house. It just didn’t make sense to do anything else. I did some research on the topic of becoming a landlord and since our orders were for Germany, we decided to hire a professional property manager. We were going to be 4,000-plus miles away and definitely couldn’t be involved in the day-to-day details of our real estate albatross.
Oh. My. Gosh. What a headache.
We have had our “professional” (notice the quotes) property manager forget to pay invoices and utility bills. We had a refrigerator break and had to replace it 2 DAYS before a new home warranty policy took effect. We ended up acting as the middle man between our tenant and the property manager instead of the other way around.
For the first time in years, we had to pay someone to help us do our taxes since I found the word “depreciation” to be particularly scary when taken in conjunction with the possibility of the word “audit.”
And lest you think that we are now real estate moguls living high on the hog, reaping profits from our “investment” (notice the quotes), after we pay our property manager his 10% cut, we barely cover our mortgage. And on the months when we have to pay for termite inspections, sprinkler repairs and new refrigerators, we definitely lose money.
We’ll try again to sell our house in 2 years, when we PCS back to the states after living overseas. We are crossing our fingers that the market will have rebounded enough to allow us to sell without going into debt.
But I think we have finally learned a lesson. A difficult, painful lesson.
I’m never buying a house again.**
**At least while we’re on active duty.