Members of the military may think their next permanent change of station, or PSC, means selling their home and moving to a new one. While sometimes true, many are turning their current homes into rental properties.

At America's Credit Union, its team of military family experts is available to help service members decide whether they want to sell or rent their home. To help with this decision, ACU offers the following tips.

THE DECISION TO RENT

Real estate investing can be an excellent source of additional income, and it often lets home equity increase. But with the additional income comes responsibility.

By renting a home, the owner is entrusting the property to a renter. If that person creates problems - misses rental payments, damages property, behaves irresponsibility - the property owner is responsible. 

THE PROS AND CONS OF RENTING OUT A HOUSE

Added income: While the additional income is good, it is not guaranteed. For personnel thinking of renting their home, they need to know if there is a demand for rental properties in the area and the average rent. To find out more, consult a local realtor website or visit https://www.militarybyowner.com/.

Cash flow: Renting out a property is not as simple as locking up and handing the keys over to someone else. Rental property owners need to have access to a cash flow, and sometimes this can be difficult.

For example, there will be likely repairs and upgrades made to the property prior to placing it on the market as a rental. Know what needs to be done, some money may need to be spent to make the property market ready. Make sure to have a cash flow to do this without affecting your overall financial standing.

New title: Landlord: Another consideration is being a landlord. This can be challenging as it may mean tracking down renters, making repairs, and keeping the property up. If this is a plus, then rent the property; if not, then selling the property may be the better way to go.

Use a Property Manager:If a rental property owner does not want to be involved with the rental, then enlisting a property manager should be considered.

This person (or company) takes on the tasks associated with renting the home. From vetting tenants to property maintenance, the manager assumes these tasks.

But there is a price; fees for property managers can range from 8% to 12% of the rental rate.

BUYING A SECOND HOME - THE FINANCES

A home owner may also decide to buy a second home while keeping the current home as a rental. 

Service members can use a VA loan to not only finance up to 100% of their first home, they can also use it to buy a second home. The only restriction here is based on eligibility and entitlement.

VA loan entitlement is the dollar amount the government will guarantee a VA loan. The entitlement amount is typically either $36,000 or 25% of the loan amount up to the conforming loan limit.

Using a VA loan again without paying off the first loan requires special circumstances. Certain eligibility and entitlement requirements must be met based on both loans.

Also, a second VA loan is based on county loan limits. In other words, the government will pay up to 25% of the county loan limit if you default. A good tip is to try to have enough entitlement left over to cover 25% of the overall loan amount.

GETTING INTO THE GAME

America's Credit Union was recently recognized as one of the best financial institutions for military members. And when it comes to renting out a home or buying a second home, ACU stands ready to help.

For more information about how to get into the game, using a property manager and the finances, visit https://www.youracu.org/military-pcs-question-should-i-sell-or-rent-my-house/.

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