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Sell Or Rent After PCS Orders Drop · Military Real Estate Rookie Show

0:00
SPEAKER_00: Hello, military real estate rookies.
0:02
SPEAKER_00: I'm your host, Rena.
0:04
SPEAKER_00: Today's topic is much what the military goes through on a day in day time.
0:11
SPEAKER_00: PCS orders drop.
0:12
SPEAKER_00: Now, what are you going to do with the home?
0:16
SPEAKER_00: So I'm going to get in detail about it.
0:18
SPEAKER_00: I know that it's relatable because I once was in the military and I'm retired, but I want to make sure that you guys get some good education on it.
0:28
SPEAKER_00: So, hey, hey, hey, I'm your host, Rena Military Real Estate Ricky Show, the podcast that's where we talk about real estate, building wealth, making smart money moves, and smart property decisions, and helping you avoid some of the mistakes that can cost you thousands of dollars.
0:45
SPEAKER_00: I'm your host, Rena.
0:46
SPEAKER_00: I serve Florida and Georgia.
0:49
SPEAKER_00: And today we're talking about something that many real estate uh military rookies uh have that the orders drop, and then now what you do?
0:58
SPEAKER_00: So you get orders, maybe you're expecting them.
1:01
SPEAKER_00: I don't know.
1:02
SPEAKER_00: Maybe you were in you knew you was gonna move, was coming eventually, but you didn't know the date.
1:06
SPEAKER_00: Or maybe you were just getting comfortable.
1:08
SPEAKER_00: The kids were settled in school and you finally found a grocery store that you like, and you had just finished making the house a feel like a home.
1:17
SPEAKER_00: Then selling your next assignment is somewhere else.
1:20
SPEAKER_00: Now you're looking at a completely different set of responsibilities.
1:26
SPEAKER_00: You got to figure out where you're going to live the next time, the next day.
1:30
SPEAKER_00: You got orders to coordinate, you got family moves, you got all the things, the schools, the everything, right?
1:36
SPEAKER_00: But there's one major decision that can get lost in the middle of all this plenty.
1:42
SPEAKER_00: And what are you going to do with the house when you're you're leaving behind?
1:46
SPEAKER_00: Are you gonna sell it?
1:47
SPEAKER_00: Are you gonna rent it out?
1:48
SPEAKER_00: Are you going to turn into like a hire a property manager?
1:53
SPEAKER_00: What are some things that you're going to do?
1:55
SPEAKER_00: Are you just going to leave it sitting empty?
1:57
SPEAKER_00: Which some people do, believe it or not.
2:00
SPEAKER_00: And here's the part I really want you to think about.
2:03
SPEAKER_00: That house might be one of the biggest financial assets that you have.
2:08
SPEAKER_00: It might have built up equity over the years.
2:13
SPEAKER_00: Yes, it might represent years of mortgage payments, right?
2:19
SPEAKER_00: Mortgage payments is actually a safe and I hope you guys know that, right?
2:22
SPEAKER_00: Maintenance, hard work.
2:24
SPEAKER_00: Okay.
2:24
SPEAKER_00: So, but if you're making the wrong decision, the same house can become a financial burden every month.
2:31
SPEAKER_00: And nobody wants to be stationed across the country and worried about what's going on with your home, right?
2:37
SPEAKER_00: A broken air conditioner, a tenant, you know, didn't pay the rent or an expected bill or the HVAC went out.
2:43
SPEAKER_00: You don't have time for that, right?
2:45
SPEAKER_00: Trust me, that is not the kind of welcome package you want anybody wants, right?
2:49
SPEAKER_00: And to be worried about.
2:50
SPEAKER_00: So today we're going to have a real conversation about your options.
2:55
SPEAKER_00: We're talking about selling, renting, managing the property from a distance, leaving it vacant, dealing with negative equity, yes, and planning for future plans for moving.
3:08
SPEAKER_00: We also want to talk about the mistakes I want military homeowners to avoid and how to make decisions that support you.
3:16
SPEAKER_00: And if you're a veteran or a military retiree who no longer has PCS orders but is thinking about relocating, downsizing, or keeping this house for maybe a rental, this conversation is for you.
3:29
SPEAKER_00: So grab a coffee, settle in, and talk about how to make your real estate work for you.
3:35
SPEAKER_00: Now, let's get into it.
3:37
SPEAKER_00: Don't make a real estate decision in a panic.
3:41
SPEAKER_00: That is simply something you do not want to do.
3:44
SPEAKER_00: Let's start with the first thing I want every military homeowner to understand.
3:49
SPEAKER_00: When the orders arrive, you have a lot going on.
3:54
SPEAKER_00: Your timeline may be tight, and there may be pressure to simply just do it, right?
4:02
SPEAKER_00: But one of the worst decisions that you can make when you're dealing with major real estate decisions is simply because you're overwhelmed.
4:09
SPEAKER_00: You can make major mistakes, right?
4:12
SPEAKER_00: You might tell yourself, I'm gonna sell this house, I don't care, I don't care, I don't want to deal with it.
4:17
SPEAKER_00: Or you might go into the opposite direction and say, I'm gonna keep it, I'm gonna, you know, rent it out.
4:22
SPEAKER_00: Real estate goes up and down, and somebody else can pay my mortgage, right?
4:26
SPEAKER_00: So both decisions might sound reasonable at first, but neither should be made without looking at the numbers.
4:34
SPEAKER_00: Let's say you purchased a house five years ago, you made a mortgage payment, and you kept up with the mortgage, you kept the property up, maybe replaced the flooring, upgraded the kitchen, or put money in the backyard.
4:47
SPEAKER_00: Sounds really, really good.
4:48
SPEAKER_00: Now you receive orders to move.
4:50
SPEAKER_00: You look at a few online estimates, see that the home in your neighborhood are listed for more than what you paid, and you think, wonderful, I made money, I'm going to sell.
5:02
SPEAKER_00: But wait a minute, what is the home actually worth?
5:07
SPEAKER_00: What are the similar homes asking for in your neighborhood?
5:11
SPEAKER_00: Right?
5:12
SPEAKER_00: So you have to understand that those are some things that you need to really dive into.
5:17
SPEAKER_00: What do you owe on the mortgage, right?
5:20
SPEAKER_00: You have to subtract that from that.
5:22
SPEAKER_00: What will the selling expense be?
5:24
SPEAKER_00: The real estate commissions, all the closing, you know, all the things, you know, maybe you give some closing costs to the buyer.
5:30
SPEAKER_00: And are these repairs needed?
5:33
SPEAKER_00: You need to make sure you make a list.
5:35
SPEAKER_00: And after all, all these expenses, how much money will I actually walk away from the closing table?
5:42
SPEAKER_00: That's the number that really matters.
5:45
SPEAKER_00: And now consider the opposite situation.
5:48
SPEAKER_00: You look at a home and decide it you don't want to sell the home because you believe it will appreciate over time.
5:55
SPEAKER_00: That's fine, that could happen.
5:58
SPEAKER_00: But appreciation is not guaranteed and it doesn't pay your bills every month unless you sell, refinance, and otherwise access the equity.
6:08
SPEAKER_00: And if you keep the property, you'll still be responsible for the closing cost.
6:13
SPEAKER_00: The lesson here is simple.
6:15
SPEAKER_00: Don't decide what to do with your house until you decide or understand what the numbers look like, what the whole house looks like, what is the financial end result will be.
6:28
SPEAKER_00: Start with the information, not the emotion.
6:31
SPEAKER_00: And remember, just because you learn you love the house doesn't automatically mean keeping it is the best financial decision.
6:38
SPEAKER_00: And I get it, you may feel very connected to that house, and you know you need to sell, but you have a sweet spot for your home, and I get it.
6:47
SPEAKER_00: On the other hand, just because you're moving doesn't mean you must sell it.
6:51
SPEAKER_00: You have options.
6:52
SPEAKER_00: The goal is to understand them before making a commitment.
6:56
SPEAKER_00: Because once you make that commitment and the house is sold, then you know say, Hey, look, I don't know if I regret it or maybe I should have kept it.
7:04
SPEAKER_00: So those are some things that you need to understand.
7:08
SPEAKER_00: Now, option one, sell the house before you PCS.
7:12
SPEAKER_00: Now we talked about this.
7:13
SPEAKER_00: Let's talk about the selling piece.
7:15
SPEAKER_00: You decide to sell for some military families.
7:18
SPEAKER_00: Selling a house before the PCS is the cleanest, most practical options.
7:22
SPEAKER_00: You don't have to worry about it.
7:24
SPEAKER_00: It is done.
7:25
SPEAKER_00: You have completely sold it, so it's off your hands.
7:29
SPEAKER_00: You no longer have to manage the property from a distance and you can focus on you and your family.
7:35
SPEAKER_00: But selling is a financial decision as well.
7:39
SPEAKER_00: So let's break it down.
7:41
SPEAKER_00: Imagine your home can sell for$350,000, okay?
7:45
SPEAKER_00: And you still owe$250,000 on your mortgage.
7:49
SPEAKER_00: Sounds really good, right?
7:50
SPEAKER_00: At first glance, you think, huh, I've made$100,000 in equity.
7:55
SPEAKER_00: I am going to love that.
7:57
SPEAKER_00: And you have a substantial equity, but the$100,000 is not automatically the amount you're going to receive.
8:04
SPEAKER_00: You still need to account for the cost of the selling.
8:08
SPEAKER_00: Any negotiation concessions, understanding liens, and other transaction expenses is going to be subtracted from$100,000.
8:18
SPEAKER_00: For illustration, suppose you're selling expenses and concessions.
8:21
SPEAKER_00: Concessions are just giving the buyer something like a credit, come to$25,000.
8:28
SPEAKER_00: That will leave you about$75,000 before any additional adjustments, you know, are removed.
8:34
SPEAKER_00: Those numbers are just an example.
8:36
SPEAKER_00: Another actual cost depending on the transaction, your agreement with the real estate professional, the buyer negotiation, other circumstances that is subtracted from that$100,000.
8:47
SPEAKER_00: But you see my point, right?
8:48
SPEAKER_00: Your estimate equity and your potential cash proceeds are not the same thing.
8:54
SPEAKER_00: That's why I recommend getting a realistic market analysis and a seller net sheet before making decisions.
9:02
SPEAKER_00: And a seller net sheet estimate is what you receive after the mortgage is paid off, you know, and all the anticipated seller expenses.
9:12
SPEAKER_00: And it gives you a better understanding, starting point for comparing selling with renting.
9:17
SPEAKER_00: Now, let's discuss timing.
9:19
SPEAKER_00: If your reporting data is approach approaching, you need to consider how much time you have to prepare for the property, list it, negotiate the offer, complete the inspection, and so on.
9:31
SPEAKER_00: Sometimes the home sells quickly, which is a very good thing.
9:35
SPEAKER_00: And sometimes it doesn't.
9:36
SPEAKER_00: A buyer might need financing.
9:38
SPEAKER_00: An appraisal could come in and below the contract price.
9:41
SPEAKER_00: An inspection negotiation could delay the process.
9:44
SPEAKER_00: A transaction could even fall through.
9:48
SPEAKER_00: So don't build a plan that assumes everything would happen perfectly because it doesn't.
9:53
SPEAKER_00: Talk with your relator early before a realistic timeline and what you can do to make your home more marketable.
10:02
SPEAKER_00: That may include addressing obvious maintenance issues, decluttering, improving curb pills, and pricing the home.
10:10
SPEAKER_00: And here's another consideration: what if you need the money from your current home to purchase the next home, right?
10:16
SPEAKER_00: So you need to coordinate these transactions carefully.
10:20
SPEAKER_00: You may have to discuss these financing options, temporary housing, closing dates, other arrangements with your lender and real estate professional.
10:29
SPEAKER_00: It's not going to happen overnight, guys.
10:31
SPEAKER_00: It takes time.
10:32
SPEAKER_00: So do not plan on this money to make real financial decisions.
10:36
SPEAKER_00: Don't assume that selling and buying at the same time will automatically line up because they usually don't.
10:43
SPEAKER_00: The more you plan in advance, the more prepared you will be and the less stressed you will be.
10:49
SPEAKER_00: Okay?
10:50
SPEAKER_00: So now selling may be especially attractive if you want to reduce debt, rebuild your savings, and simplify your finances or avoid a long-term, you know, you being a long distance landlord.
11:02
SPEAKER_00: And sometimes that's the right move.
11:04
SPEAKER_00: That's fine.
11:04
SPEAKER_00: You don't have to own a rental property to be successful in real estate.
11:09
SPEAKER_00: You don't have to keep every home you ever purchased.
11:13
SPEAKER_00: You do not.
11:15
SPEAKER_00: Okay, sometimes the smartest move is to take the proceeds, protect your financial position, and move forward with a clean slate.
11:24
SPEAKER_00: The goal is to isn't to collect houses just to say you own them.
11:29
SPEAKER_00: The goal is to build a financial future that works for you.
11:33
SPEAKER_00: You know, don't be like the Joneses.
11:36
SPEAKER_00: You have to make these smart financial moves for you and your future.
11:40
SPEAKER_00: So, option two, turn your former home into a rental.
11:43
SPEAKER_00: We talked about this.
11:44
SPEAKER_00: Now, let's talk about the option that gets many military homers, homeowners excited.
11:49
SPEAKER_00: Let's rent, keeping the home and renting it out.
11:52
SPEAKER_00: Yes, I got rental income.
11:54
SPEAKER_00: And I understand why.
11:55
SPEAKER_00: I understand why you're excited.
11:57
SPEAKER_00: But that's not always the case.
11:59
SPEAKER_00: You already purchased the property, you've been paying the mortgage, you may have built equity in it, and you believe the home could come a long-term investment.
12:07
SPEAKER_00: It really sounds good.
12:08
SPEAKER_00: Instead of selling, you want to rent it, which is fine.
12:11
SPEAKER_00: And potential real estate income would be very good for your future income.
12:16
SPEAKER_00: That can be reasonable strategy, right?
12:18
SPEAKER_00: But I want you to understand something very important.
12:21
SPEAKER_00: Renting your house is not the same as automatically making money from your house.
12:25
SPEAKER_00: It is a lot of hard work.
12:27
SPEAKER_00: It is.
12:28
SPEAKER_00: Let's run through a simple example.
12:30
SPEAKER_00: Suppose you believe you believe you'll probably can rent for$2,400 per month.
12:35
SPEAKER_00: Sounds really good.
12:36
SPEAKER_00: Your mortgage payment, including principal, interest, taxes, and insurance, is$1,950.
12:43
SPEAKER_00: You look at your numbers and think, great, I'll make$450 every single month.
12:49
SPEAKER_00: Not so fast.
12:51
SPEAKER_00: You are getting very excited.
12:53
SPEAKER_00: You know, do you have not accounted for vacancy or any repairs?
12:58
SPEAKER_00: The HVAC went is going down or something like that, or you know, routine maintenance.
13:04
SPEAKER_00: If you pick a uh property manager and they want their piece of the pie, what happens if the tenant move out?
13:12
SPEAKER_00: Do you have enough reserves to hold on to the next month?
13:16
SPEAKER_00: You know, all these things are a compass of all of that$2,400,$450 that you think that you're gonna make and keep and put in your pocket.
13:26
SPEAKER_00: Let's say you set aside money each month for maintenance, that's good.
13:29
SPEAKER_00: Vacancy, that's good.
13:31
SPEAKER_00: Those costs may reduce the parent$450 difference substantially, right?
13:36
SPEAKER_00: So you won't have to use that or eliminate it altogether.
13:40
SPEAKER_00: Your actual result will depend on the property and its expenses.
13:45
SPEAKER_00: So if it's a new construction, nine times of ten, you probably won't have any problems with it.
13:50
SPEAKER_00: You know, not like the H Factory, anything like that, but not no major repairs, I'm hoping.
13:56
SPEAKER_00: But you know, maybe an older home maybe give you some problems.
13:59
SPEAKER_00: You just never know.
14:00
SPEAKER_00: When your mortgage principal is paid down, you may bill equity.
14:04
SPEAKER_00: And if the property appreciates, that may increase your equity as well.
14:08
SPEAKER_00: So you have to look at those types of information.
14:12
SPEAKER_00: And but those are three different things that you can do.
14:15
SPEAKER_00: A property might appreciate while producing negative monthly cash flow.
14:20
SPEAKER_00: Did you know that?
14:21
SPEAKER_00: So it doesn't matter as long as you're making that mortgage note, it's gonna keep going, but you may just be making a negative cash flow, and a property can have substantial equity, but still require you to contribute every month, you know.
14:36
SPEAKER_00: So you need to know which situation you're getting into, you know.
14:40
SPEAKER_00: So before you decide to rent a house and do a rental analysis, research comps rental properties around your area, and make sure that you have the right numbers to, you know, post it and list it on uh the platforms for your rental income.
14:58
SPEAKER_00: So that includes, you know, the mortgage taxes, insurance, and maintenance, vacancy, property management, and association fees when you're uh getting that number for rental.
15:10
SPEAKER_00: So think about larger future expenses to so as replacing an HVAC system, repairing a roof, or dealing with a plumbing problem, you know, those things happen.
15:22
SPEAKER_00: And ask yourself whether property can support it financially.
15:26
SPEAKER_00: Now, here's something else military families should consider.
15:29
SPEAKER_00: Your home may have been perfect for you, but that doesn't necessarily mean it's ideal as a rental.
15:35
SPEAKER_00: So maybe it has an expensive backyard and a pool, and maybe the neighborhood rental demand is limited.
15:41
SPEAKER_00: You know, maybe the rental, the property needs repairs before it's ready for tenants, you know, or maybe the rent you can reasonably charge is lower than the expected rentals.
15:51
SPEAKER_00: Don't let that fact that you own a home convince you that you must keep it.
15:55
SPEAKER_00: Run the numbers first, military real estate rookies, because at the end of the day, you are responsible for that property.
16:02
SPEAKER_00: And please don't use your entire emergency fund to keep up with a rental property because at the end of the day, you are responsible for that rental property.
16:12
SPEAKER_00: Real estate investing should be part of your financial plan, not something that puts your family under constant pressure all the time.
16:21
SPEAKER_00: Now, the next topic is the loan distance landlord problem.
16:26
SPEAKER_00: Like I said, you know, you PCSing and you move into a new duty station.
16:31
SPEAKER_00: You don't have to be worried about, you know, if the HVAC or the tenant is destroying your property, you know, because because a being a landlord isn't just about receiving rent, it's really a responsibility.
16:42
SPEAKER_00: You're running a business.
16:44
SPEAKER_00: You really are.
16:45
SPEAKER_00: You are running a business.
16:46
SPEAKER_00: So you have to keep up on the numbers and the maintenance and the repairs and the payments and the evictions and everything.
16:53
SPEAKER_00: And when you station somewhere else, these responsibilities don't disappear.
16:58
SPEAKER_00: They even get a little, you know, stressful because you have to stay on top of those things.
17:04
SPEAKER_00: But if you hire a property manager, remember they're gonna get a piece of the rental income too.
17:08
SPEAKER_00: So that may can reduce some of the stress, but they still gonna have to communicate with you.
17:13
SPEAKER_00: So you're still gonna have to deal with it.
17:15
SPEAKER_00: So it is a it's a business.
17:17
SPEAKER_00: The tenant says the air conditioner stopped working.
17:19
SPEAKER_00: You know, you gotta go, you gotta find a person to if you hadn't connected with a person in the neighborhood or someone in your area, you got to find a person that can do it, can fix air conditioners.
17:29
SPEAKER_00: It's just a lot, you know.
17:31
SPEAKER_00: So you just gotta make sure that you are constantly in your mind working with the either the property manager or somebody in your neighborhood or close by that can run over and take care of that.
17:46
SPEAKER_00: Maybe it'd be a handyman or some sort of somebody like that.
17:50
SPEAKER_00: You know, build that relationship before you move you move and so that you can make sure that you are taken care of and that trusted person is not taking advantage of you and not, you know, say for instance, if there's a repair and they charging, you know, two three hundred dollars for a little small little thing, you know, you're not getting ripped off.
18:11
SPEAKER_00: So being a being a landlord can can really be interesting.
18:17
SPEAKER_00: So make sure you do that.
18:19
SPEAKER_00: So you have those two main approaches.
18:21
SPEAKER_00: You can manage your property yourself, or you can hire a property manager, you know.
18:26
SPEAKER_00: So that's self-management, you know, you may have to save money on management fees, but it requires time and organization.
18:32
SPEAKER_00: You need to understand the landlord tenant laws that apply to your property, maintain accurate financial records, respond to maintenance requests, handle tenant communication, you know, all of those things.
18:44
SPEAKER_00: You can also need, you also need reliable local contractors and a process for emergencies, because you are going to be nowhere near that home.
18:54
SPEAKER_00: So you need to make sure you have a plan, a team, well, say, a team to support you so you won't have to be stressed about it, you know.
19:03
SPEAKER_00: So hiring a property manager, like I said, you know, they're the ones that handle leasing, rent rent collection, maintenance coordination, tenant communication, all of that.
19:13
SPEAKER_00: But there is a cost, you know.
19:15
SPEAKER_00: So just make sure that you are you understand that it's cost.
19:21
SPEAKER_00: So, and you know, that is something that you may want to do.
19:27
SPEAKER_00: So let's get into what if you owe more than the house is worth?
19:31
SPEAKER_00: What if your your mortgage balance is higher than you could recently sell for the house?
19:36
SPEAKER_00: Maybe you purchased recently, maybe the local market has softened, maybe your finances and your purchase price, you haven't had much time to pay down along.
19:44
SPEAKER_00: Those are some things considering when you sell in your home.
19:47
SPEAKER_00: You may be upside on your house when you're trying to sell.
19:51
SPEAKER_00: So that's the way that you could, you know, easily be upside down and you say, you know what, I just want to sell it.
19:57
SPEAKER_00: You know, so those are some things.
19:59
SPEAKER_00: So don't assume PCS orders automatically erase mortgage obligations and allow you to walk away from your property.
20:05
SPEAKER_00: No.
20:06
SPEAKER_00: And don't ignore the problem because you're hoping the market would recover.
20:09
SPEAKER_00: Talk to your mortgage lender, you know, if you're upside down in your mortgage.
20:13
SPEAKER_00: The sooner you understand your position, the more time you may have to evaluate your choices, you know.
20:19
SPEAKER_00: So just make sure that you are handling it because it's not going to be overnight that you, if you if you say that you're gonna sell it, sell it, sell it right, you know.
20:30
SPEAKER_00: So I just want to make sure that you guys are educated on that because a lot of times people can say, you know, I'm leaving and I'll I'll I'll just leave the house and and not sell it and it sits there.
20:42
SPEAKER_00: And then there's some, you know, homeless people or something coming in there, you know, because it's vacant and they know it's vacant.
20:51
SPEAKER_00: So, you know, so I just wanted to share that with you guys.
20:55
SPEAKER_00: And like I said, if you're looking to buy and sell, I am a realtor in Florida and Georgia, and I'm willing to help.
21:04
SPEAKER_00: And I share, I want you guys to share this experience, you know, because and share this with other military members or even people that's trying to buy and sell their homes because it may be beneficial for you.
21:16
SPEAKER_00: So I'm Rena Barron, serving Georgia in Florida.
21:18
SPEAKER_00: Follow me on Instagram, Rena Barron Real Estate for Real Estate Insights, home buying tips, property strategies, updates.
21:26
SPEAKER_00: And you also can email me at rena baron real estate at gmail.com to discuss your real estate needs.
21:34
SPEAKER_00: And if you're buying and selling in Georgia or Florida, I love the opportunity to work with you.
21:41
SPEAKER_00: And if your next excitement is taking you somewhere else, reach out anyway.
21:45
SPEAKER_00: I can help connect you with any real estate professional in your area.
21:51
SPEAKER_00: Before you leave, please follow or subscribe to my podcast, Military Real Estate Rookie Show.
21:58
SPEAKER_00: Leave a review, share this episode with military family veterans and service members preparing for a PCS and help us get this information out to people who need it.
22:10
SPEAKER_00: Because the right decision today can make a difference in your financial future for years to come.
22:17
SPEAKER_00: I'm Rena Barry, and remember your orders may move you, but they don't have to derail your financial goals.
22:25
SPEAKER_00: Until next time, military real estate rookies, keep learning, keep planning, keep building at your future in one real estate decision at a time.
22:36
SPEAKER_00: Thank you all and have a great day.