If you are PCS’ing or thinking of moving to Hawaii and renting on base, STOP. The military is amazing, and they definitely help our men and women achieve so much in life. However, one thing that they lack is educating the military members on some aspects of finances, such as housing.
Most younger couples who move to Hawaii or first time home buyers simply think they cannot afford a house in Hawaii. This is not true in most cases. Other conversations are based on the short time of the duty station and the fear of appreciation. This, again, is something historically proven to show that the Hawaii property has continued to appreciate.
One thing that the BAH allowance should go towards is a mortgage payment and not a rent payment. When you own property, you are building wealth (most of the time).
With the average time on island being at least three years, most real-estate investments pay off. Even on the off chance you did not make a huge profit, you still are building credit and setting the groundwork for future homeownership. Now that the military on base housing is privatized, they really are not doing our services members any great benefits by charging rent. The conversation should be, first, can they and should they look to buy versus rent?
One of the best benefits available is the VA eligibility and getting a VA loan. These loans currently have some historically low interest rates. This also allows for the VA buyer to purchase a home with little to zero money out of pocket. In the private sector, this is simply not an option. Civilians, on average, need to save and put down a minimum of 10%, but 20% is preferred of the sales price. In contrast, a VA buyer can buy the same home with zero dollars out of pocket. We have a network of VA specialized local lenders that really have veterans’ best interest at heart.
Another concern is thinking they might be overpaying for the property. The VA appraisal clause allows for a VA appraiser to check the valuation against closed sales and make sure that the numbers make sense. If the property does not appraise for the sales price, then the buyers can cancel or try and work out a price reduction. In short, there are many tools and aids available to safeguard and protect the VA buyers. This is in addition to the house condition, as not all properties are VA eligible.
Rent on the island is relatively high. The average on base housing can run $2600 for a 3 bedroom house, and sometimes even higher. It really makes good sense to compare that against a purchase and see what the payment for a mortgage would be versus the rent. Most of the time the same number can be achieved, or, in some cases, a lower monthly cost than the rent. Obviously, there are some benefits to living on base and owning is not an option for everyone, but it is certainly worth the effort to run the numbers.
As a proud member of the Hawaii Life MST (Military Specialized Team) and certified MRP, I am in a great position to help. I have a group of preferred lenders, inspectors and others to help answer, take care and facility a smooth VA transaction. With the number one goal of getting our members into home ownership that makes the best financial sense for the buyer. If you want to explore this further, please get in touch with me. And if nothing else, stop renting.