Investing In Military Areas

Buying & Selling Real Estate
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Investing In Military Areas

Jimmy SmithPro Member
Lake Grove, NY · Member since 2019 · 21 posts · 6 votes

I am currently looking to take my first leap into REI. I've had a few ideas as to what I want to do and have decided that rental properties and the BRRRR strategy are what I need to focus on to achieve my goals. The market I currently live in -Long Island, NY- is very expensive and I believe after running some numbers my best bet is to invest in the south. I also believe I should invest where I was stationed there.

Here's my thought process in (a condensed version of) pros and cons.

Pros:

-I have an agent I trust, with whom I served with at the end of my enlistment. He also has connections to help me build my team.

-Inexpensive, the numbers are great.

-Large, consistent renter population.

-I'm familiar with the area.

Cons:

-Appreciation in the area is low.

-Flooding could be an issue if there is a big storm. It has happened in the past and stifled the appreciation.

I'm just curious on other's thoughts on investing in military areas. Any input would be appreciated, especially from those who have invested in these areas.

Thanks!

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Frank Geiger
Rental Property Investor · NC · Member since 2018 · 776 posts · 777 votes
7y

Jimmy,

I would like to add, while not common, that some bases shutdown, training numbers fluctuate, or brigades move and that can severely hurt the population of these small military towns. 

Some bases have strong lineages and I would absolutely invest there. It's funny how rent around those areas are in line with BAH. You can always get their Commander as a reference that way if they don't pay rent you know who to call. 

Best Of Luck!

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  • Sean McDonnell
    Real Estate Agent · Surf City, NC · Member since 2017 · 648 posts · 597 votes
    7y

    Investing in military towns have its own set of pros and cons but overall I am a fan of it.  With military tenants, you know about how much money they make and their paycheck is automatic (99% of the time...). Military renters receive an allowance for housing which is also public knowledge.  

    A large downside is that military renters can legally break their lease if they receive orders.  A method of combating and getting ahead of it is just building a good relationship with your military tenants to which they would be open and transparent about their future plans.  Military tenants are usually responsible but that is not an excuse to not conduct your own due diligence.  There are dirt bags and liars everywhere. 

    Overall, I have experienced responsible and honest military tenants.  It is a great way to help provide for members of our great nations' military and their families.  

    1Reply
  • Frank Geiger
    Rental Property Investor · NC · Member since 2018 · 776 posts · 777 votes
    7y

    Jimmy,

    I would like to add, while not common, that some bases shutdown, training numbers fluctuate, or brigades move and that can severely hurt the population of these small military towns. 

    Some bases have strong lineages and I would absolutely invest there. It's funny how rent around those areas are in line with BAH. You can always get their Commander as a reference that way if they don't pay rent you know who to call. 

    Best Of Luck!

    3Reply
  • John Franklin
    Specialist · Salado, TX · Member since 2014 · 69 posts · 50 votes
    7y

    I’d just add, make sure you understand the additional tenant’s rights service members enjoy under SCRA.  This can result in higher vacancy and collection loss over time.

    1Reply
  • Jimmy SmithPro Member
    OP
    Lake Grove, NY · Member since 2019 · 21 posts · 6 votes
    7y

    @Sean McDonnell, thanks for the input!

    I am aware that they can break their lease should orders come up. I'm fairly familiar with the process having been in myself, and also familiar with the notion of less reputable service members. In order to mitigate those mentioned issues, my strategy is to target properties that would house a family rather than a single renter as the members spouse and children would remain there whilst they are deployed. Thus potentially locking down the tenant for an entire duty cycle. Do you believe that would be effective?

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  • Jimmy SmithPro Member
    OP
    Lake Grove, NY · Member since 2019 · 21 posts · 6 votes
    7y

    @Frank Geiger, thanks!

    I do understand that sometimes bases shut down. The particular area I am looking to farm has two bases in the area with twenty minutes of each other, separate branches. One is a small Navy base at which I was stationed while the other is a large Air Force base. The rents do align with BAH and the Commander reference certainly does get used, it's never pretty. Have you had any luck investing in military areas?

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  • Jimmy SmithPro Member
    OP
    Lake Grove, NY · Member since 2019 · 21 posts · 6 votes
    7y

    @John Franklin, thank you!

    I am aware of those rights, but declined to address that potential issues as I have a strategy to lessen the potential of that happening. I intend to purchase properties that would best serve a family as to ensure it is still rented to the members family while the member is deployed, thus potentially having the tenants for an entire duty cycle or more should they remain in the area for another duty. Do you think that is an effective way to mitigate the potential issue?

    0Reply
  • Kevin Hunter
    Rental Property Investor · Carlisle, PA · Member since 2013 · 1k+ posts · 543 votes
    7y

    @Jimmy Smith, I love investing in military towns.  Far more upside than downside in my opinion.  Check out a post I wrote about investing in military towns, how I approach a buy with respect to investment properties, looking at BAH rates, desired tenant base, etc....

    https://www.biggerpockets.com/forums/552/topics/40...

    1Reply
  • Jimmy SmithPro Member
    OP
    Lake Grove, NY · Member since 2019 · 21 posts · 6 votes
    7y

    @Kevin Hunter, thank you!

    I had my target renter planned, but not the idea to reach out and find which areas they're living in. Definitely appreciate directing me to that post!

    0Reply
  • Dan R.
    Fort Polk, LA · Member since 2018 · 41 posts · 47 votes
    7y

    @Jimmy Smith

    I would look at Fort Bragg/Pope Army Airfield. It's the largest military base population wise, on earth IIRC.

    No tddgoing to shut down anytime soon, and has an economy that is not entirely dependent on the base. Unlike Ft. Polk, LA or Ft. Sill, OK.

    Though NC does have income tax.

    1Reply
  • Sean McDonnell
    Real Estate Agent · Surf City, NC · Member since 2017 · 648 posts · 597 votes
    7y

    @Jimmy Smith Your model sounds great and I believe it will work wonders.  The military clause in the SCRA scares a lot of would be investors away from military towns to which I say great! More for you and me.  If you time it right and get tenants at the beginning of a tour, you will know they are only going to be there for 2-3 years, but you can also better plan for replacing them and limit vacancy.  Families are ideal but be wary of discriminating against those potential renters who aren't married or don't have children.  Good luck and keep us posted on how things work out for you.

    1Reply
  • Jimmy SmithPro Member
    OP
    Lake Grove, NY · Member since 2019 · 21 posts · 6 votes
    7y

    @Sean McDonnell, thanks for the support. We seem to share the same sentiment on the SCRA. I will definitely be wary of discrimination. It's not that I wouldn't rent to those individuals, but would obviously prefer a family. I believe many singles can be dissuaded by adjusting rent more toward the family renters' BAH with dependents rates.

    I will certainly keep you posted.

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  • Jimmy SmithPro Member
    OP
    Lake Grove, NY · Member since 2019 · 21 posts · 6 votes
    7y

    @Dan R., I have considered those areas. I might look more into them in the future, as they certainly have the longevity on their side. I do however have my connections in real estate near the base at which I was stationed. There is also an economy there outside of the military, though the service member definitely support it a good bit.

    Are you invested in the areas you mentioned?

    0Reply
  • Dan R.
    Fort Polk, LA · Member since 2018 · 41 posts · 47 votes
    7y

    @Jimmy Smith

    When I get back there I will. My home in Louisiana is the first property I have purchased.

    0Reply
  • Dan R.
    Fort Polk, LA · Member since 2018 · 41 posts · 47 votes
    7y

    @Dan Robbins

    I've visited the other posts, and they're...not desired duty stations, since there's nothing around them, closest bookstore to polk and sill is an hour away.

    0Reply
  • Jimmy SmithPro Member
    OP
    Lake Grove, NY · Member since 2019 · 21 posts · 6 votes
    7y

    @Dan R., where in Louisiana? I wasn't stationed too far from there.

    0Reply
  • Account Closed
    Rental Property Investor · Central, FL · Member since 2016 · 950 posts · 821 votes
    7y
    Originally posted by @Dan R.:

    @Dan Robbins

    I've visited the other posts, and they're...not desired duty stations, since there's nothing around them, closest bookstore to polk and sill is an hour away.

    I feel having a less than desirable bowl location actually works to your benefit because people that wanna buy when they’re there and they just want to rent and leave

    0Reply
  • Dan R.
    Fort Polk, LA · Member since 2018 · 41 posts · 47 votes
    7y

    @Jimmy Smith

    An hour north of Lake Charles, 2 to 3 hours from the air force base.

    0Reply
  • Dan R.
    Fort Polk, LA · Member since 2018 · 41 posts · 47 votes
    7y

    @Eric C.

    There are some advantages to what you mention...if I wanted to stay here I wouldn't have to pay a property manager.

    0Reply
  • Jimmy SmithPro Member
    OP
    Lake Grove, NY · Member since 2019 · 21 posts · 6 votes
    7y

    @Dan Robbins, I don’t recall ever traveling that far north. I have been to Baton Rouge, the nicer parts at least. I imagine that is a bit south of you though.

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  • Jimmy SmithPro Member
    OP
    Lake Grove, NY · Member since 2019 · 21 posts · 6 votes
    7y

    @Eric C., that’s a perspective that had not crossed my mind! Thanks for that. Have you invested in any military areas?

    1Reply
  • Account Closed
    Rental Property Investor · Central, FL · Member since 2016 · 950 posts · 821 votes
    7y
    Originally posted by @Jimmy Smith:

    @Eric C., that’s a perspective that had not crossed my mind! Thanks for that. Have you invested in any military areas?

    No, I’ve just lived/stationed in enough undesirable locations that renting was the primary means unless you lived on base.  

    0Reply
  • Patricia Steiner
    Real Estate Broker · Hyde Park Tampa, FL · Member since 2019 · 2k+ posts · 3k+ votes
    7y

    I have several investor clients who invested in "military markets" and here are the lessons learned:   

    1. SFH suitable for families were challenging in maintenance/upkeep expense and in getting market rent. Many families retain their "permanent" home so they were looking to stay well below the housing allowance on their "assignment home."

    2.  Townhouses with garages were popular with both families and single service personnel - as well as to civilians working at the base. 

    3.  The appreciation wasn't there...and wasn't on the horizon.  Buying low and in good/great condition will never be more important in getting a return.

    4.  The tenants could not have been better.

    Hope this helps...

    1Reply
  • Dan R.
    Fort Polk, LA · Member since 2018 · 41 posts · 47 votes
    7y

    @Jimmy Smith

    There's an air force base near Shreveport, about 2 hours or so north of me. Have only driven thru Baton Rouge.

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  • Jimmy SmithPro Member
    OP
    Lake Grove, NY · Member since 2019 · 21 posts · 6 votes
    7y

    @Patricia Steiner, that definitely helps. Which bases do you clients invest around? I know the type of unit s revive members rent is often dependent on the area and what that that area has available in terms of business and other services.

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  • Patricia Steiner
    Real Estate Broker · Hyde Park Tampa, FL · Member since 2019 · 2k+ posts · 3k+ votes
    7y

    We're proud to be the home of MacDill AFB here in Tampa which is part of Central Command.  Tampa is on the high end of the rent reimbursement scale and it takes every bit of it to secure housing here.  Since commissioned officers have three year guaranteed deployment terms, a rental agreement for that term can convince my investor clients to graduate the rent annually.  With SFHs, lawn service is a must include in the rent here in Tampa where summer (and lawn cutting) is ever lasting.  With all the challenges, you won't find better tenants...and that's worth a whole lot.  

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