Help for a Military Newbie in Fort Walton Beach

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Help for a Military Newbie in Fort Walton Beach

Anthony LilleyPro Member
Investor · Fort Walton Beach, FL · Member since 2018 · 6 posts · 1 vote

Hey guys,

I've been following BP for about a year now, and am considering buying a house with a VA Loan in the Fort Walton Beach area. My goal would be to make that house a rental when inevitably have to move (2-3 yr time-frame). Right now, the market in this area does not seem to support that goal. Most houses that fit our family's size (4 bedroom/2 bath) are going for between $250K-$300K, but market rents for houses that size seem to be closer to the $1,700 range.

I'm a little afraid of the BRRR method right now, because I have a young child, and another one on the way. I'm not in any particular rush to buy, but since our family is growing, we are talking about moving/buying to accommodate, and it seems to me that VA Loan would be a great way to start our path to passive income when we move. The problem I'm seeing is that none of these houses even come close to the 1% Rule. Is it possible that my area just simply does not support that rule right now with the market conditions?

I'm just wondering if there are any local investors that could shed some light on this/offer me some advice?  Thank you!

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Melissa Jolley
Rental Property Investor · Niceville, FL · Member since 2019 · 89 posts · 62 votes
7y

@Anthony Lilley

You are not wrong. The best advice I can give for our area is to buy ugly. We did this in Bluewater Bay and have done it at other duty stations. You really have to ask yourself....what is the MOST important thing? Try to find a 3br that has enough space to make it a 4br. In our market, 4Br homes are in high demand.

I feel that the likelyhood of meeting the 1% rule in Okaloosa County is difficult IF planning to buy with a VA loan and not planning to buy in Crestview.

Let me know if I can help!

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  • Melissa Jolley
    Rental Property Investor · Niceville, FL · Member since 2019 · 89 posts · 62 votes
    7y

    @Anthony Lilley

    You are not wrong. The best advice I can give for our area is to buy ugly. We did this in Bluewater Bay and have done it at other duty stations. You really have to ask yourself....what is the MOST important thing? Try to find a 3br that has enough space to make it a 4br. In our market, 4Br homes are in high demand.

    I feel that the likelyhood of meeting the 1% rule in Okaloosa County is difficult IF planning to buy with a VA loan and not planning to buy in Crestview.

    Let me know if I can help!

    2Reply
  • Charlie CameronBusiness Member
    Investor · Niceville, FL · Member since 2017 · 450 posts · 366 votes
    7y

    Welcome @Anthony Lilley!  First of all, you have to come out to a local investor meetup.  There are Fort Walton and Niceville versions.  Unfortunately I probably won't see you there until April (temporary reassignment), but you'll meet great folks who can answer these questions.

    You could look at Crestview as well.  Might better support your numbers.  I was able to by a 3/2 in Niceville that even during a recession should at least break even as a rental (that was my biggest requirement), but I did put some money down and renovate the master bath.  A 4/2 might be more difficult to get a deal on that makes sense without needing some rehab.  

    You might consider an FHA 203K renovation loan. I was going to use one but for the level of renovation we just didn't end up needing it. But you could easily use that to perform the work before you move in but not have the interest rate of a hard money loan. A hard money lender is another option you could use to fund a rehab and then refinance it to a VA loan for yourself. For both the 203K and the hard money, you'd likely have to have a general contractor do the work (I know a few). There are limitless possibilities! You don't HAVE to live in a BRRRR. I'm with you, I wouldn't put my little one in a construction zone either!

    When are you thinking of buying? If it is after April, I'd love to help you out. I'm active duty, have used the VA loan, and I'm an investor, so I think I can help you with the right deal. If it is more near term, then you should definitely talk to @Matt "Roar" Gardner.  He also fits all those criteria (and then some!).  

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  • Matt "Roar" Gardner
    Real Estate Agent · Tampa, FL · Member since 2018 · 464 posts · 452 votes
    7y

    @Anthony Lilley - Melissa and Charlie are both correct, but I'll add one more option for you - STR. The BEST way to cash flow in the area is through the short term rental (STR) market. I own two, one in Destin and one on Okaloosa Island. I know plenty of military members who went this route and are doing quite well. I'll be happy to help if you decide to go this route. :)

    2Reply
  • Zach WesterfieldPro Member
    Warner Robins, GA · Member since 2016 · 244 posts · 167 votes
    7y

    @Anthony Lilley

    I am also military who bout with a VA loan in the area, and I also own multiple rental units in the area. Do you have a target area to live? I think if you are not picky in area you can find something with 4 beds for close to the 1% rule. It will be a family decision though. You will not probably find anything in Destin or on the star that fits that description. However there are other areas, not just crestview, where it can work. I also did a live in flip in the area (while having 2 kids) so I understand the adversity to a BRRR, but you can find some things that only require a little work. Let me know if you would like to talk more

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  • Zach WesterfieldPro Member
    Warner Robins, GA · Member since 2016 · 244 posts · 167 votes
    7y

    @Zach Westerfield

    Sorry for all the typos, I’m on my phone and auto correct is killing me

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  • Account Closed
    Investor · United States · Member since 2018 · 565 posts · 356 votes
    7y
    Originally posted by @Anthony Lilley:

    Hey guys,

    I've been following BP for about a year now, and am considering buying a house with a VA Loan in the Fort Walton Beach area. My goal would be to make that house a rental when inevitably have to move (2-3 yr time-frame). Right now, the market in this area does not seem to support that goal. Most houses that fit our family's size (4 bedroom/2 bath) are going for between $250K-$300K, but market rents for houses that size seem to be closer to the $1,700 range.

    I'm a little afraid of the BRRR method right now, because I have a young child, and another one on the way. I'm not in any particular rush to buy, but since our family is growing, we are talking about moving/buying to accommodate, and it seems to me that VA Loan would be a great way to start our path to passive income when we move. The problem I'm seeing is that none of these houses even come close to the 1% Rule. Is it possible that my area just simply does not support that rule right now with the market conditions?

    I'm just wondering if there are any local investors that could shed some light on this/offer me some advice?  Thank you!

    Lost of cheap money is allowing good deals to get over paid for by experienced real estate investors. it's possible now is just not the time for this strategy. My advice and what I'm doing is finding assets that do not require a large amount of capital and allow asymmetric risk reward. Airbnb arbitrage is a good model for this if you want to stay in the real estate industry. This strategy would also allow you to easily transition your business to a new market if you were required to move suddenly for your job. 

    Good luck! 

    and let the negative comments begin... 

    1Reply
  • Account Closed
    Rental Property Investor · FL · Member since 2019 · 54 posts · 29 votes
    7y

    @Anthony Lilley

    Welcome Anthony! Im over at Hurlburt Field and I took the STR rental route when i came to the fort walton beach area a few months ago and its been great for me! Id love to walk you through the numbers and how i found success in that route. I got one of my friends to do the same! Let me know when you would like to chat and go through the details since its still fresh in my head! :)

    1Reply
  • Anthony LilleyPro Member
    OP
    Investor · Fort Walton Beach, FL · Member since 2018 · 6 posts · 1 vote
    7y

    Thanks for the responses everyone.  @Charlie Cameron, I have been trying to make it to some of the meetups, but my schedule has been a little too crazy lately.  @Zach Westerfield, we are trying to stay East of Navarre, and West of Eglin, just because of commute times. We don't HAVE to move, so we are really just trying to see what's there, and see if we can make something make sense.  Based on what I've seen on the market thus far, I thought maybe I was just crazy, but I appreciate everyone's feedback that the numbers aren't fantastic in this area.  

    1Reply
  • Zach WesterfieldPro Member
    Warner Robins, GA · Member since 2016 · 244 posts · 167 votes
    7y

    @Anthony Lilley

    You should definitely be able to find something in the fort Walton area within the bounds you described. It will definitely be an older property, but you can find something in your price range with 4 bedrooms if you are willing to settle for a dated property. In that area, most homes were build pre 1980s, so it’s just a matter of finding one in good repair, albeit dated. With that, once you move you can rent as is, or modernize the property and increase the value, getting higher rent.

    1Reply
  • Mark Manship
    Realtor · Pensacola, FL · Member since 2014 · 54 posts · 20 votes
    7y

    @Anthony Lilley

    This may be a little out of your scope/area, but a few of us military folks from the Eglin/Hurlburt/Duke Field area have transplanted as far west as Pensacola. 

    Obviously, your commute will be longer, but you might find properties that are better suited for your traditional purchase-hold-rent model as you described ("1% rule") with the myriad of demand signals (hospitals, Navy bases, Navy FCU) creating a strong rental market. Your competition won't be AS high for STRs (both in acquisition and marketing your own) as tourists tend to frequent Destin moreso than Pensacola Beach, but there are still plenty of folks that visit P-Cola and nearby beaches for concerts, festivals, conferences, TDYs, Blue Angels Weekend, etc. 

    In either case, you might also consider using a VA-Renovation loan (contact Deborah Joslyn at University Lending), which is a good VA alternative to the 203k and might allow you to find those uglier 3+/1+ homes in need of work at a lower entry point and with no FHA-imposed PMI.

    2Reply
  • Melissa Jolley
    Rental Property Investor · Niceville, FL · Member since 2019 · 89 posts · 62 votes
    7y

    @Mark Manship is right on. I am liking the VA Reno loan more and more. Deborah is an awesome choice as well. The uglier homes are sitting longer since most of the buyers want to do minimal work. That is a great opportunity for you to get in lower and still get what you want. There are a few additional fees this type loan but check it out for sure!

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