O4 List

[villanelle]

Curious, of the senior guys out there, have any of you had success as a buy and hold landlord over the course of a career? This method seems to be an option to grow long term wealth by military members. Clearly, it can be a huge liability and headache...

Maybe. You can buy and rent, but since that typically happens after only living in the home for 2-3 years, chances are good you aren't going to be able to rent it for what it costs (mortgage, HOA, taxes, insurance, property management, minus the tax advantages). Of course, that depends a lot on the specific rental market you are in. If the housing market is growing rapidly, you can still make money, even if you take a small loss on the rent (though you still need to be able to handle the loss from a cash flow perspective). That's the case for us. We lost money monthly but the San Diego market has rebounded enough in our time away that we've gained ~$75-100K in equity on a town house. Had we been gone from 2007-2010, we'd have not only been out the monthly expenses, but we'd have lost $125k in equity.

And there's not inconsiderable risk--damages, vacancies, lengthy and expensive evictions during which you make nothing, etc.

So, sometimes it is possible to do it and come out ahead. Maybe

 

[707guy]

Just saw this linked on facebook and thought it would be of interest to most here:

"Please join us on 30 May 2014 at 5pm (1700) EDT for Midrats Episode 221: “Officer Retention with VADM Bill Moran and CDR Guy Snodgrass "

http://blog.usni.org/2014/03/27/on-...on-with-vadm-bill-moran-and-cdr-guy-snodgrass

 

[ProwlerPilot]

Personally, I know that my wife would be happier if she were able to build a career, but that's not feasible because I will have to be exceptionally lucky to live in a place for more than 3 years (and I won't know it until near the 3 year point). I'd also feel more comfortable with my wife and kids dealing with deployments and hectic schedules if they had roots in the area -- close friends who they've known for a long time. So while I would take a paycut to O-3 pay leaving the Navy, the fact that my wife can build a career would more than make up for it. And the cherries on top are that my kids won't have to find new friends every 3 years and I won't ever have to go underway on short notice or miss birthdays/holidays/growing up milestones.

Then there's the fact that enlisted servicemembers want to start families, too, and they don't make anywhere near O-3 to O-5 pay while doing it. So when a flag officer who's set with a 6-figure income for life gets in front of a crowd telling them that they are overpaid, then it's a huge slap in the face.

My family is well off financially while I'm active duty, but if I look into the future retiring as an O-5 (assuming I even get selected), I'm trying to figure out how to send my kids to college in the next 3 years and how to purchase my first home while competing with people substantially younger than me for jobs. Meanwhile my wife is also trying to finally start to build a long-term career in her upper 40s. Quite honestly, the prospect of that is very scary to me. AD pay isn't going to make me stay/leave, it's what happens to my family when, not if but when, the Navy spits me out.

Because your spouse is unable to establish a career due to the nature of your work, is that reason for higher compensation for you personally? I don't think that these two factors are a realistic reason for higher pay in the military. This is already a strange place in the sense that you get a pay raise for saying "I do". I have yet to find a civilian employer that automatically makes that type of concession.

My argument is that the pay in the officer ranks is very competitive with the civilian sector and I don't think that throwing more money at service members in salary is the correct motivator. Overpaid? No. But definitely not underpaid. I turned down a $125,000 bonus when I dropped my papers, and took a pay cut.

Some civilian jobs come with more stability, some do not. Some come with homesteading ability, some do not. Some require even more travel than being in the military (take my friend who lives in Boston, but works in San Diego Monday through Friday). All career paths are a choice. The fact that a military member must move every 3 years is part of the job description and a choice we all made when joining. Not saying it doesn't wear on you and the Navy should not attempt to find ways to mitigate some of this pressure, but it is the nature of the business. It is also not unique to the military. With companies going global more and more, moving for the next promotion is becoming more of a standard.

Frankly I don't understand your feeling of getting "spit out" after 20 years when you will start enjoying a retirement check and free health care at the ripe old age of 42 (give or take a few years). There are very few professions out there that you start recieving a pension at 42 and can then begin another career (of which you can potentially retire at 62 with a second retirement) to increase that income even more.

I don't want to take away any of the sacrifice that we as military members have made. I don't want to diminish the service we have all given to this country. But I don't believe that the military officer corps isn't getting paid enough. The enlisted side is a completely separate issue that would take an entirely new thread.

My personal opinion is the military needs to focus on continuing to provide the experience, job satisfaction, and sense of fairness that all of us hoped for when we signed up. The higher OPTEMPO, longer deployments, overemphasized scrutiny on social issues (some time is needed here, but not as much), and a loss of confidence in "you've got my back" are the issues that need focus.

 

[insanebikerboy]

Curious, of the senior guys out there, have any of you had success as a buy and hold landlord over the course of a career? This method seems to be an option to grow long term wealth by military members. Clearly, it can be a huge liability and headache...

If you're trying to be a landlord while in the military buying cheaper houses is the only way you can do it. Aim for a house that when factoring in all expenses associated (mortgage/HOA/etc) would put the total cost somewhere near E-5/E-6 BAH. Then, you can ask for rent higher than that and make money. If it sits for a bit, reduce the rent to that E-5-ish level and break even.

I've done it with two houses and it works. I lived in both before I moved on. Too many folks, especially JOs, buy houses that are pretty nice but are pushing the limits of JO BAH. When they turn around and try and rent it they are surprised/shocked when they take a hit.

 

[NUFO06]

I am example of how market dependent buying and renting has become. I bought January 2011 in Jacksonville and paid less than half the homes original selling price. Everyone was saying home prices were on the rebound, but not in Jville as I became 30K underwater in one year. This last year the home has started to rebound but I am still underwater some. i have been a able to rent it out for 300 more than Mortgage, insurance and HOA thanks to the ridicolous 3.25% interest rate.

 

[ea6bflyr]

If you're trying to be a landlord while in the military buying cheaper houses is the only way you can do it. Aim for a house that when factoring in all expenses associated (mortgage/HOA/etc) would put the total cost somewhere near E-5/E-6 BAH. Then, you can ask for rent higher than that and make money. If it sits for a bit, reduce the rent to that E-5-ish level and break even.

I've done it with two houses and it works. I lived in both before I moved on. Too many folks, especially JOs, buy houses that are pretty nice but are pushing the limits of JO BAH. When they turn around and try and rent it they are surprised/shocked when they take a hit.

A buddy of mine bought a duplex. Rented the other half out and paid the difference. He was making bank.

 

[Spekkio]

Because your spouse is unable to establish a career due to the nature of your work, is that reason for higher compensation for you personally? I don't think that these two factors are a realistic reason for higher pay in the military. This is already a strange place in the sense that you get a pay raise for saying "I do". I have yet to find a civilian employer that automatically makes that type of concession.

I understand your point that people shouldn't be paid higher just for having families. However, if you want to freeze pay then you shouldn't be surprised if more mid-grade officers leave when dual earner household income with two college-educated adults with careers in their upper 20s/lower 30s starts to easily exceed what the Navy will pay you as an O-3/O-4. There's also a happiness issue there which is more important than the pay issue -- many women in the 21st century want to work and have careers of their own, and even fewer male military spouses are willing to sacrifice their careers for 20 years, which is probably one of several reasons that the DoD has trouble retaining women into the senior officer ranks. Yes, we all realized that the military would require moving, but leadership shouldn't be shocked when people leave because they (and particularly gfs/spouses) want more stability and certainly shouldn't be shocked when more people leave if they make it financially disadvantageous to put up with the frequent moves.

Is there a way to allow officers to stay in the same geographic location from DH -> end of XO tour to mitigate this (in my community this would be a total of 7 years in the same location)? I don't know. I know some who have done it and some who have tried but got sent around the earth anyway. But it would mitigate the concerns that make many servicemembers feel like their pay is not 'that much' -- namely, the lack of building equity in property and the spouse's career hit.

Some civilian jobs come with more stability, some do not. Some come with homesteading ability, some do not. Some require even more travel than being in the military (take my friend who lives in Boston, but works in San Diego Monday through Friday). All career paths are a choice. The fact that a military member must move every 3 years is part of the job description and a choice we all made when joining. Not saying it doesn't wear on you and the Navy should not attempt to find ways to mitigate some of this pressure, but it is the nature of the business. It is also not unique to the military. With companies going global more and more, moving for the next promotion is becoming more of a standard.

There are very few companies that require relocation every 2-3 years. Also, moving for a promotion/raise is substantially different than moving because 'your orders are up, time to go.'

Jobs with lots of travel also tend to be higher-paying -- similar to the military. Because traveling and time away from family wears on people, and if they don't pay more then people won't put up with it no matter how much they might enjoy the job.

Frankly I don't understand your feeling of getting "spit out" after 20 years when you will start enjoying a retirement check and free health care at the ripe old age of 42 (give or take a few years). There are very few professions out there that you start recieving a pension at 42 and can then begin another career (of which you can potentially retire at 62 with a second retirement) to increase that income even more.

The Navy will 'spit me out' because there will come a point when I can't work there anymore, and it will be at an age where I would be entering my highest earning potential in most other careers. And to me, it's scarier because my kids will be older and I will not be set up to handle the expenses that come with it on 1/4 of active duty compensation.

 

[BleedGreen]

Radio interview with VADM Moran and CDR Snodgrass on " the white paper."

http://www.blogtalkradio.com/midrat...ention-with-vadm-bill-moran-cdr-guy-snodgrass

 

[lowflier03]

That interview/discussion was definitely enlightening. I wonder if we should split the discussion on it and the white paper into a separate thread?
My thoughts after listening to it.
- I found it interesting that the first solution proposed by VADM Moran for the CO's bailing, is to try and change the commitment requirements to force them to stay on after the Command tour. Not sure that's really an optimal solution to the problem.
- I like how respectfully CDR Snodgrass put the focus on leadership. ie He didn't say that the current leadership is directly responsible for the problem, but instead that more importantly In the eyes of the junior officers, leadership is part of the problem.
- Any one of the 3 things that cause people to leave their job/business (Quality of work, Quality of Compensation, Leadership) are arguably all being experienced by the Navy today. Which I think ties in well with the point that the CNO brought up in the previously linked speech (though not in the way he intended it) My take on it is that pay isn't the reason people are staying, there is that sense of patriotism and naval heritage which has been keeping people around (and will continue to keep some around no matter what), however you can't maintain a family or sense of fulfillment with patriotism alone.
-It's not at all surprising that the Enlisted side feels exactly the same way that the Officers do. I wonder how long it is until a similar study comes out for them?

 

[lowflier03]

Something that I thought was conspicuously lacking from that conversation, was any mention of the issues with all the firings, overzealous IG's, and navy crimes fearing leaders.

Unlike pay, bonuses, and BS obsession on GMT/SAPR/etc. this is something that Naval Leadership can directly affect today in order to start the road to positive change. I feel these gems need to be re-linked as they are directly applicable to this situation.