Why Military Should Buy Real Estate in Hawaii

A few of you exceptionally brave readers have asked me to write about Hawaii real estate.

Better yet, I found local professional realtor Randy Prothero to discuss the subject.  

[Nords note: In general, servicemembers on active duty should not buy a home— no matter where they’re stationed.  But see my comments and disclosures after the end of this post.]

Buying a home in Hawaii could be a means to an end.

Your BAH (Basic Allowance for Housing) combined with your VA benefit, will give you an opportunity to start to build wealth.


Here are the most common concerns about buying a home in Hawaii.

  • We will only be here a few years.
    • How long will you be at your other duty stations? If you do not buy now when will you buy?
  • Homes in Hawaii are so expensive.
    • So is renting.
    • Your BAH in Hawaii is higher than other places, offsetting the expense.

The government will buy you a home.

  • The VA Loan Program gives you a no down payment mortgage. (100% loan).
    • No mortgage insurance.
    • VA interest rates are competitive and many times it is lower than conventional loans with 20% down).
  • The interest on your mortgage payment is tax deductible. You get a double tax benefit on your BAH.
  • If you rent you get no tax benefit and you pay someone else’s mortgage for them.
  • If you take base housing you are just giving back one the biggest benefits your military service has earned you: Home Ownership and saying no thank you.

You can build wealth while in the military.

  • Prices in Hawaii appreciate over time.
    • In 1985 the median priced single family home on Oahu was: $158,000.
    • In June of 2014 the median priced home was: $700,000.
    • Over the short term they can and do go up and down. Like you hear on the radio ads, past performance is no guaranty of future performance. Although it is the best indicator.

What if prices are down when I PCS out?

  • Have an exit strategy.
    • The military always has an exit strategy when they go into battle, so should you. Buy a home that you can rent out when you leave and still make your payments. That gives you the option of selling it or keeping it when you leave.
    • Do not buy the home of your dreams. That comes when you retire from the military or after you have had more time to build wealth. Buy a means to your end.

How to get started?
Contact us at: (808) 625-5057 or Darnelle [at] ProtheroGroup dot com to set an appointment with a VA specialist. We can walk you through the process. Also we highly recommend your attendance at one of the free VA seminars. Contact us to register at the above number or at www.VA808.com

(If you’re interested in contributing at The-Military-Guide.com, please see our posting guidelines.)


[More Nords notes:  When you’re on active duty, you don’t know how long you’ll be at a duty station.  If you buy a home then you may have to sell the house under adverse market conditions with high transaction costs or, even worse, become a long-distance landlord. I’ve done all of those things and I’ve regretted them during the years it took to recover from those decisions. Your military life will be challenging enough without taking on the additional financial risk.

However, some people feel more comfortable owning real estate than investing in the stock market. A few of you are hard-wired to be homeowners and landlords, and you’ll handle the risks (with the inevitable setbacks) as part of your life. For everyone else considering real estate, I recommend a library copy of the excellent analysis in “Rent vs. Own” before you make your own informed decision.   If you’re planning to buy here then it’s probably because you’re planning to live here after you leave the military.  If you’re planning to be a landlord here then you should discuss your property analysis at the BiggerPockets.com forums.  

Whether you rent or own, the lower your housing expenses then the faster you’ll reach financial independence.

If you decide to buy here, I recommend using a realtor you trust and learning about VA loans.  I know the company and the people, they’ve been doing business in our neighborhood for decades, and they’ll treat you right.  No money changed hands for this post and there are no affiliate links. However Beau bought me an excellent Zippy’s lunch, and their mahi mahi sandwich comes with extra potato-mac salad!]


Related articles:
Real estate: rent or buy?
So you want to be a landlord.
Book review: Rent vs. Own

WHAT I DO: I help you reach financial independence. For free. I retired in 2002 after 20 years in the Navy's submarine force. I wrote "The Military Guide to Financial Independence and Retirement" to share the stories of over 50 other financially independent servicemembers, veterans, and families. All of my writing revenue is donated to military-friendly charities.

  1. I think the decision to rent/own/on of off base while in active service is driven by schools and kids. In my case the local public schools in and around NB Norfolk, NWS Charleston, MCAS Beaufort left much to be desired. Hence the decisions to buy in districts what were desirable and could have resale value. i also made the decision at times to keep the kids in there school while I commuted on the weekends. To a DC tour from Virginia, SC from Charleston. Hard choices yes, but one needs to have that work-life-spouse-kids balance in the military. As aside from all I have heard Hawaii public schools are some of the worst in the nation, especially if one is not native.

    • Good point, Peter. I think schools are one of a number of factors in the base housing decision.

      Your information about Hawaii public schools is controversial and generally regarded as incorrect. The national standardized tests don’t take into account Hawaii’s multicultural and multilingual students. Hawaiian ancestry has no correlation with school performance, although at least one private school (Kamehameha) offers free tuition to students of Hawaiian ancestry.

      Our daughter attended Hawaii public schools from kindergarten through graduation and was accepted at several top-ten universities as well as the U.S. Naval Academy. (She chose Rice University.) Personally I think the most important factors in a child’s school performance are the parents, and perhaps the commuting distance, but I may be biased…

  2. Bought and sold 4 homes in a 23 year active duty career, Virginia, North Carolina, South Carolina, Pennsylvania. Sometimes made lots of money, other times not so much, but never had to write a check at closing. A home first and for most is a place to live, a roof, shelter. If you see it as an investment or profit center, amongst other asset classes I think you will be chasing your tail for a goodly while. That is true in PA as it is the the Aloha state. Nothing against military housing or housing communities, just wanted a more diverse mix of folks in life and work.

    Comment? Question? What's on your mind?