Landlording & Rental Properties

The Pros and Cons of Investing in Military Base Properties

Expertise: Real Estate Investing Basics
18 Articles Written
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It’s time we address something that has been talked about by a lot of people lately: investing on military bases. While the idea could be brilliant, you also need to carefully dissect each aspect of it before you decide whether you want to give it a go. To help make it easier for you, let us break down the pros and cons.

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I’m an active duty Marine, so I may or may not have a little experience living near military bases.

Pros of Investing in Property Near Military Bases

Military Bases

Recession Resistance

Right off the bat, housing in military bases is recession-resistant, which is always a good thing. This is also beneficial because you'd get tax exemptions for members of the service housing.

Now, what do we exactly mean by this? For example, if the tax exemption for a given state is around $30,000 per month, that amount will not decrease so long as you won’t transfer to another state. Otherwise, your monthly tax exemption for housing would change depending on the state that you’re in. With that said, as long as you stay in the same state, the tax exemption is maintained to its original value and it will not decrease.

Payment Security

Another advantage is security in payment. Commanders will step in whenever a service member misses a payment so you can be sure that you will be paid. Furthermore, if a tenant fails to pay for reasons such as debt or bankruptcy, they will be forced to pay through direct deposits. They value their reputation and need to protect their career, as this is what gives them eligibility for top-secret clearance.

It will also work out well for you, as tenants really won’t want to reach a point where the commander gets involved. Again, they want to protect their careers. Just make sure to gather all the information about your tenant should it reach a point where you have to contact the commander.

Cleanliness

If you are concerned about the cleanliness of your real estate, most military tenants are generally clean and organized, so the destruction of your property should not be a problem for the most part. While not all of them may be like that, most of them are, so you really don't have to worry.

Growth Potential

Military bases can potentially grow, especially during times of conflict. This means that as the number of personnel increases, your potential tenants would also increase. In this market, the more population, the better it will be for your business.

Before investing in military bases, inquire at their local personnel office about the scope of their plan throughout the years and ask about whether they want to grow or cut back in size. Although this information might be prone to change, it can still be a good factor to consider before you start investing.

Related: Point-Counterpoint: 6 Pros of Investing Near Military Bases

Cons of Investing in Property Near Military Bases

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Short-Term Tenants

One downside to investing near military bases is accepting the reality that the length of your tenants’ stay will be short—usually around two to three years on average. Though there may be tenants who stay longer, it’s really not common. If you’re lucky, some tenants could also stay for more than a decade. But the chances of that happening are usually slim.

This can still work out well for you, as this could mean you’ll be able to welcome new tenants more regularly. On the other end, there’s also a possibility that no new tenants will replace the ones that leave.

Lease Breaking

Another downside is that tenants have the right to break the lease or cut their lease short due to relocation assignments—and they cannot be penalized for it. Usually, they'll give out a 30-day notice then leave. Sometimes it's longer, especially in cases where they want to take a vacation prior to leaving or are waiting for the schedule of the movers. Sometimes the leave is also shorter than 30 days, but this happens rarely.

Tenants could also be deployed and would cut their lease short if they’d prefer to send their families home during the time of their deployment, especially if their families don’t have any friends at the base. This is unlikely to occur, however, since we are currently not at war.

There’s nothing you can do when they break the lease, and it would be best for you to not fight the system or make it difficult for your service members. Doing so might get you blacklisted, wasting all your hard work and effort.

Gradual Income Growth

Although military salaries increase over the years, so does inflation, making income growth gradual rather than exponential.

It is also important to note that an increase in population does not always mean more tenants. Housing allowances are usually limited, which means a limited number of tenants.

Shrinkage Potential

Furthermore, you also need to educate yourself about the base and its closure potential to assess where your investment stands should the base shrink or be closed in the future. This is why studying the area in coordination with the personnel office is very important prior to investing.

Related: Point-Counterpoint: 6 Cons of Investing Near Military Bases

Should You Invest?

It’s a matter of weighing both the pros and cons when it comes to investing in the military base and coming up with an appropriate strategy for sustaining your real estate business.

It is up to you whether investing in property of this type is the right decision for you or not. Keep in mind that in every market, there will always be as many downsides as there are ups, and it’s a matter of how you use the information handed to you to your advantage.

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Are you investing in military bases? 

Tell us why or why not in the comments below.

David Pere has been active in the U.S. Marine Corps since 2008. He got his start as a real estate investor in 2015 and since then has bought and sold over 50 rental units, partnered on multiple fix...
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    Dawn Brenengen Real Estate Broker from Raleigh, NC
    Replied about 2 months ago
    I watched Fayetteville become a ghost town 30 years ago when Desert Storm had the 82nd deployed for a long time. Not likely to happen, but it's definitely a consideration and something you want to have reserves for in case it does!
    David Pere Rental Property Investor from Oceanside, CA
    Replied about 2 months ago
    Agree completely Dawn!
    Cameron Rockwell Rental Property Investor from Virginia Beach, VA
    Replied about 2 months ago
    Great Article David, I am actively investing in Norfolk with around 10 military tenants. I can speak to all of these as both pros and cons considering I am in the military as well.
    David Pere Rental Property Investor from Oceanside, CA
    Replied about 2 months ago
    Thanks for the comment Cameron, glad you liked it!
    William Potting from Jacksonville, NC
    Replied about 2 months ago
    Enjoyed this article. I'm currently living in Jacksonville, NC and am looking into buying my first rental property here.
    David Pere Rental Property Investor from Oceanside, CA
    Replied about 2 months ago
    Right on, are you at Lejeune?
    Erin Henry
    Replied about 2 months ago
    We are currently not at war? I don't know the marine's rotation, but the Air Force is deploying pretty heavily these days.
    David Pere Rental Property Investor from Oceanside, CA
    Replied about 2 months ago
    Perhaps compared to nothing, but not compared to a decade ago. Also, when people say deployment, that doesn't necessarily have anything to do with combat or war.
    Brian Garlington Realtor from Oakland CA investing in Cleveland & Oakland, CA/East Bay Market
    Replied about 2 months ago
    Great article David! I actually just got my MRP Certification as a Realtor so I'm excited.
    David Pere Rental Property Investor from Oceanside, CA
    Replied about 2 months ago
    Thanks Brian, glad you enjoyed it!
    Dan Travieso Investor from Fayetteville, NC
    Replied about 2 months ago
    Great article. I believe stability depends on the base. Got to do your homework on this one. With the expanding federal budget deficit and some of our deployments overseas starting to wind down it could be risky investing near smaller basis that may be susceptible to a shutdown or dramatic downsizing if the Federal government decides to downsize the force. Also, as the military continues to lead the way in technological advances we could see less "boots on the ground" needed which could also result in downsizing. National Guard/ reserve and small basis used primarily for training could also be risky as the government may decide to combine them with the larger basis in order to reduce overhead. Be smart and do you homework on the type of troops and size of the base and understand that not all military installations are created equal! For example, Ft. Bragg (home of the 82nd Airborne, Special Forces Command, Army Special Operations Command, Forces Command, and Joint Special Operations Command certainly would be extremely low risk o close or dramatically downsize given the type of military personnel based their however some of the smaller bases in Georgia and out west could be a much higher risk.
    David Pere Rental Property Investor from Oceanside, CA
    Replied about 2 months ago
    That is true, but those same units also have a higher possibility of picking up and deploying, several of those members may terminate leases during that time. Always an interesting trade-off. Thanks for your input, I agree!
    David Krulac from Mechanicsburg, Pennsylvania
    Replied about 2 months ago
    David, Thanks for your service, great article, and great name! What you say also applies to non-military government facilities. Much of my investment has been in a county where the largest employer is the state government and the second largest employer has been the Federal government. The results have been very positive over both the short term and the long term. The economy is steady without the fluctuations of a factory or non=government economy. During both up cycles and down cycles the economy has been steady and not subject to drastic economic shifts. And this county is the fastest growing county in the state (of the 67 counties in the state), due in no small part to the large government input to the economy. David Krulac Bigger Pockets Podcast #82
    David Pere Rental Property Investor from Oceanside, CA
    Replied about 2 months ago
    That is a great point David!
    Daniel Smyth Rental Property Investor from Rockford, IL
    Replied about 2 months ago
    I would LOVE to invest in military housing! Nothing is close to home anymore, so maybe later for me. I see this investment as a WIN-WIN! Leasing to military individuals, or the DOD directly allows you controls the civilian market could only dream of having. First of all, you know ho much the service member is making. You can easily attach the rent to his pay-check. You can have weekly inspections of the property if you wish, and they will wait there for you to Do the inspection if required! Any issues with the tenant can be addressed with a phone call to a shop-head or other officer in control of the service member. When I was in the Marines, the OFF-Base housing was to die for! The only issues you may face, are when a serviceman changed duty stations and must break the lease. Best thing about that, is that there are people just waiting to get in! I only see plusses, unless the military base closes up. It happens!
    David Pere Rental Property Investor from Oceanside, CA
    Replied about 2 months ago
    I think a base closing is the worst possible downside, but it does happen...However, I'm sure places like Pendleton are safe hahaha
    Kerry Baird Rental Property Investor from Melbourne, FL
    Replied about 2 months ago
    I have built my portfolio in military communities, and started with our own fixer that we bought on our first assignment in England. We renovated and sold it when we got our next assignment. And did it again. And did it again. I have long term tenants near Air Force bases in several cities. Great article with the pros and cons. Thankfully, we haven't chosen a location that is dependent upon one employer, nor have had the draw-down blues.
    David Pere Rental Property Investor from Oceanside, CA
    Replied about 2 months ago
    That is awesome Kerry, keep up the great work!
    Blake Piedrahita
    Replied about 2 months ago
    Thanks for writing up this article, it was very informative and to the point. As someone who is poised to make my first out of state investment in an area nearby a military base, I have taken most of these into account and still feel it will be a good decision for me. I have the added benefit of my SO's family living in the area and having some connections in the area.
    David Pere Rental Property Investor from Oceanside, CA
    Replied about 1 month ago
    That is great Blake, hope it works out well for you!
    Christopher Stacy Rental Property Investor from Wiesbaden Germany
    Replied about 2 months ago
    Spot on David. I invest in the Fort Gordon area and it is very stable and recession resistant as you mentioned. I bought my first property there 11 years ago and it is still a cash cow. I would love to get into the Tampa Bay area near Macdill, but it's very pricey. I can buy 3 houses in Augusta for the price of one in Tampa, but it is Florida and that's where the wife wants to go so we'll see! Thanks!
    David Pere Rental Property Investor from Oceanside, CA
    Replied about 1 month ago
    Sounds good Christopher, best of luck!
    Valerie Cudnik
    Replied about 2 months ago
    I was thrilled to get a military family into my rental just as the whole COVID thing happened. Husband is primary breadwinner, and he, of course, didn't lose his job or get laid off. What tax exemption are you talking about? It really isn't clear. Also, military tenants can't legally break their lease while deployed so that their families can move. It must be a PCS for that legal exemption. There are a few ways around that, particularly if they aren't reenlisting after the deployment, they can sometimes get their home changed before they leave, but it won't happen after they are deployed.
    David Pere Rental Property Investor from Oceanside, CA
    Replied about 1 month ago
    Good points Valerie, but I think that may depend more on local laws, and how the lease is written.
    Valerie Cudnik
    Replied about 2 months ago
    Base closures are, IMHO, the biggest risk. Like you said, do your homework. I grew up in the SF Bay area. In the early 90s they closed 10 bases because the cost of living was too high. Decimated the housing market. It came back, of course, because it's California and Silicon Valley. I currently live in the Norfolk, VA area. The government is by far the largest employer. NAS Oceana has been on the chopping block a few times, and would seriously impact the local housing market if it closed. If another BRAC commission is created, it will probably be on the list again. But then we've got more than 15 bases in the greater Hampton Roads region.
    Joe Miller from Cincinnati, OH
    Replied about 1 month ago
    Great article! Question tho... so I’m 20 and just enlisted in the AF and ship off for bmt in August. I’m interested in real estate investing but I need some advice getting started. Should I choose my base of preferences based on the real estate markets around them or just go with the flow and buy a rental property wherever they station me?
    E Stephens New to Real Estate from Houston, TX
    Replied about 1 month ago
    My boyfriend retired from the Air Force, and he owns rental properties. I read him your question, and he laughed. According to him, your dream list is irrelevant. The military already knows where they want to put you. He says invest wherever you're stationed. That's what he did.
    Kristen Robinson
    Replied 22 days ago
    Con: High rates of domestic violence in the military. I'm picturing walls punched, doors kicked in.
    David Pere Rental Property Investor from Oceanside, CA
    Replied 22 days ago
    Pro: this sounds like a jaded, and not factually based con. Picture what you wish, but even if that was the case...that is why you have a deposit.