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The following information is provided by the Center for REALTOR® Development (CRD).

Because real estate professionals know the local market dynamics, they can help military and veteran clients make informed decisions. To be most effective, you’ll need to stay up-to-date on rental prices in your market area, even if you don’t handle rentals. You’ll also need to keep up-to-date on the local military basic allowance for housing (BAH) rates in comparison to local rental and utility costs.

You may meet military prospects who want to buy but really need to become or remain renters. Unfortunately, some agents miss this opportunity because they don’t see the tenant relationship as potential future business. Consider renters as investments in future transactions. If you work with renters and protect their interests as you would any buyer or seller client, they will remember you and refer business to you when they or their friends or family are ready to buy or sell.

Buy or Rent?

When military families experiencing a permanent change of station (PCS) need to move to a new home, they often must decide whether to rent or buy. Of course, anticipated length of stay and making the numbers work are decisive factors, but other considerations go into the decision, as well. For example, anticipation of military downsizing can affect the rent or buy decision.

During a time of downsizing, the military encourages service members to leave voluntarily, or helps ease them out. As a result, when there is a climate of downsizing, military buyers may avoid buying and opt for renting. The highs and lows of recent housing markets have definitely created a perception among the military community that renting is less risky than buying.

The lessons and consequences of the housing market meltdown are still painfully fresh for those who may still be underwater on their mortgages. They are afraid of getting caught again in a money-losing position. A buyer who used 100-percent VA financing and paid a funding fee plus closing costs and then saw housing values drop may have to bring cash to the closing table—por, the service member’s equity, or available cash, may be tied up until a previous home sells or rents.

Sell or Rent?

For prospective sellers, the cost benefit of future rental income may be part of the decision to sell a home or keep and rent it. For example, service members who are confident of returning to a location—cycling back through the station—may consider buying a home and renting it during the time away, or, a service member nearing retirement may purchase and rent in anticipation of returning to a location to settle down or start a new career.

If a service member decides to keep a home purchased with VA financing and rent it, there could be a potential downside. The service member’s entitlement—expense reimbursements that help offset the costs of frequent moves—will stay locked up in the property until it is sold or the loan paid off. Whatever remaining entitlement, if any, can be used toward the purchase of a home in a new location.

NAR’s Military Relocation Professional (MRP) Certification course takes an in-depth, thorough and detailed look at how VA financing and entitlements work. In any event, the real estate professional who knows both the sales and rental sides of their local market can help a seller or buyer evaluate the property’s investment potential as a rental. If your company does not handle rentals, your referral network should include a reliable property management firm.

Rent or Buy Calculators

An online search for rent or buy calculators yields myriad choices that can assist you and your military clients, among others. Try out some online calculators yourself to find the one that works best for you and your market. An excellent calculator tool is available at realtor.com®, which also offers a comprehensive Veterans Guide to Homeownership.

For more education about serving the military market, check out this month’s featured online course at the Center for REALTOR® Development, the Military Relocation Professional (MRP) Certification course, which is the educational requirement for NAR’s Military Relocation Professional (MRP) Certification. 

For more information, please visit RISMedia’s online learning portal from NAR’s Center for REALTOR® Development (CRD) and the Learning Library. Here, real estate professionals can sign up for online professional development courses, industry designations, certifications, CE credits, Code of Ethics programs and more. NAR’s CRD also offers monthly specials and important education updates. New users will need to register for an account.

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