Being in the military means dealing with moving and deployments. In some cases, you might never come back to the area, but what if you plan on returning to Colorado Springs after your tour?
You might not want to sell your home, but letting it sit empty while racking up all of the normal costs is expensive and the real estate market is hot right now. Selling is absolutely an option, but there’s another alternative.
You could rent your home while you are gone. Here are some of the issues you need to think about and how to solve them.
VA Loan Requirements
If you have a VA loan, you have to use the property as your primary residence. If you have had the loan for less than twelve months, you can’t rent your house to a tenant, even if they are also in the military.
There is one exception. If you are transferred to an overseas duty station, you can refinance to an IRRRL freely. IRRRL’s only take into account past occupancy.
You also can’t have a primary residence elsewhere. You may, thus, need to refinance to a different loan type or sell. This is something to discuss with the VA.
Insurance Costs
Because you can’t control everything your tenants do, even with a good lease, insurance companies consider you a higher risk. This means your homeowners insurance
premiums will go up, and often they go up more if you aren’t going to be in the area. You may also want to get loss of use insurance, which covers the rental income if something happens, and liability insurance to protect you from a lawsuit.
You can bring this back down by making safety and security updates such as installing an alarm and carbon monoxide detectors. Install good locks. These updates are often selling points for tenants too. You should also require your tenants to get renters’ insurance so their possessions are covered and they won’t be as tempted to sue you if there is a theft.
Remote Management
Colorado landlord-tenant law requires that you keep a rental property habitable and in good condition. While you can and should write up a lease that makes the tenant responsible for routine things such as snow removal, cleaning gutters, etc, you are responsible for repairs if the rental is “materially dangerous or hazardous,” “uninhabitable or unfit” or there is a hazardous condition caused by gas-burning equipment.
If you are in Virginia…or Germany…meeting these requirements can be hard. Self-management is not impossible, but leaves you having to make all kinds of phone calls to get the needed repairs done.
You also don’t have the opportunity to check on your Colorado Springs property regularly to make sure your tenants aren’t trashing it. In addition to being complicated, this can also become costly over time.
Military Obligations
This is made even harder by the nature of the military, especially if you don’t have a civilian spouse who can do it for you. Your limited time and rigid schedule (not to mention time zones) mean that touching base with your tenants requires a lot of planning.
You do still have to make occasional visits when you fly home on leave,
So, what’s the solution? If you are renting out a property and then leaving the state or the country, you need a good property management company. A property management company can handle routine inspections, deal with tenant issues, and make sure repairs happen in a timely manner. It won’t completely free you from having to check on the property, but it will make it feasible to do everything from a distance. They can also help you find the right insurance policy to balance coverage and premiums.
If you are considering renting out your home in Colorado Springs, then give us a call at 719-471-RENT (7368) to get a free rental property management assessment and analysis.
