Multifamily Investments in Killeen, TX

14 Replies

Hey guys.  I've been looking at a few multifamily deals in Killeen, TX as of late.  I know that Killeen has a lot of rough areas, with only very few of them showing slight improvement.  I also know that the military is by far the largest economic creator in the market, so it's often tough finding quality tenants for conventional multifamily properties.  For anybody that lives in or invests in Killeen, I'd like to hear your thoughts on the area and the strength of the market so that I can get a better understanding of it.  Any feedback is greatly appreciated in advance!

@Charles I'm not familiar with Killeen, but I would imagine the military presence should make it a strong renters market. Normally, that is the case around military installations.

@Charles Seaman - I’ve been away from that area since last summer but have lived there almost twenty years over three different moves. 

Yes, there are some rough areas but the heavy military presence will provide you with a good pool of quality tenants. 

Additionally, the area is growing and not because the post is expanding. Population numbers continue to increase as both veterans, retirees, and their families stay in the area. The local university (Texas A&M Central Texas) was gifted like 600 acres by Fort Hood a few years back and it continues to grow. Central Texas College is also a large campus. Plus the main highway through town was designated as an Interstate a couple years back. That didn’t create an overnight economic boom but it was significant as some retail businesses, and more importantly some commercial businesses, make being located near an interstate a requirement for new locations.

If you have more specific questions please feel free to reach out directly. I think the market is fine and it’s an area I’m looking at for my next investment as well.

I would agree with pretty much everyone killeen is a very strong renters market. With Fort hood being such a large presence it's hard not to throw a rock and hit a solider. Some investors are nervous about renting to soldiers because of how often we move but they really don't understand the PCS cycle. When a soldier is stationed at a location they have to at that location a minimum of two years. So if you have a renter who says they have just got to hood your good to go for at least one year, but the way things are now with rotations they will be stuck at Hood for a very long time. Getting a MF in a good location is they key but If you do find one you need to make an offer right away because they get scooped up extremely fast around here.

@Jason Hill

Keep in mind that deployment orders can get them out of a lease out of the blue as well. Worse part is when they drop orders out of the re tal season. Just a thought.

We own rental properties in both Killeen and Bryan. Comparing the two markets the rents are considerably lower in Killeen for a similar sized unit and condition. A 2BR/1BA that rents for $650 in Killeen goes for $750 in Bryan. It also seems easier to fill units in Bryan. No doubt Killeen is a military town. However, none of our current Tennants are military.  So far we have not encountered PCS orders. Being located on I35 corridor between Austin and Dallas many of the renters move to Killeen seeking more affordable housing. I know several who commute to Austin. 

I would agree with everything above.  The market especially for multifamily has been getting pretty heated the last couple of years.  We bought a quadplex for 170k a couple of years ago, and now they are selling for 50k more which in my opinion is more than I am willing to pay.  As far as renters, in the last 2-3 years now we have not gone any longer than 2 weeks without getting a new tenant, and one of our properties is in a little bit rougher area.  Finding a solid property manager is key in the market.  I have had similar experience with people coming out to the Killeen area that commute all the way to Austin because of how expensive it is there.  I work in between Austin and Killeen, and have also seen people buying houses out closer to Killeen that commute south as well again due to cost.  We have two properties in the market, and will most likely be looking for a 3rd within the next year.  I have noticed that anything priced around 200k in a decent area that is a quad has been getting going under contract very quickly.  

Originally posted by @Beth Phariss :

@Pete Harper for your Bryan rentals, are you mostly renting to college students? I have been looking in that area a little.

Bryan student rentals are a whole different animal. There are many brand new class A mega complexes that most students stay at. If Daddy is paying the rent they are not concerned with price. I’ve read where student housing is overbuilt. The B and C class units go to working class folks even close to the university. A&M is strong local economic driver with many university related jobs. I’m seeing all the strong indicators of local economy; new single family construction, new businesses and shopping.   

Originally posted by @Charles Seaman :

Hey guys.  I've been looking at a few multifamily deals in Killeen, TX as of late.  I know that Killeen has a lot of rough areas, with only very few of them showing slight improvement.  I also know that the military is by far the largest economic creator in the market, so it's often tough finding quality tenants for conventional multifamily properties.  For anybody that lives in or invests in Killeen, I'd like to hear your thoughts on the area and the strength of the market so that I can get a better understanding of it.  Any feedback is greatly appreciated in advance!

Depending your renting criteria you can get access to a better quality tenant pool. Most military personnel have consistent jobs i.e. your rents will get paid on time. Your issue might be around lending as most lenders either offer worse terms or none at all when you have a high concentration of military personnel. Not saying its fair or right ... but that's the way it is.

 

@Omar Khan

Would you mind citing a source for your comment about lending?

@Charles Seaman

The biggest issue you would have to deal with is the cost of repairs associated with high turnovers since military people move a lot. Specifically make ready repairs.

Also what the guy in military uniform said was legit.

Military towns are usually good for rentals

Thanks for all your feedback guys.  This has been very helpful.

@Dee Shaun The comment that @Omar Khan made about lending is a general comment that will apply to any niche multifamily property (ex. student housing, corporate housing, military housing, etc.) because lenders underwrite any type of multifamily property that has more than 20% of a niche tenant base differently than they do conventional multifamily properties.

Originally posted by @Dee Shaun :

@Omar Khan

Would you mind citing a source for your comment about lending?

@Charles Seaman

The biggest issue you would have to deal with is the cost of repairs associated with high turnovers since military people move a lot. Specifically make ready repairs.

Also what the guy in military uniform said was legit.

Military towns are usually good for rentals

Source = multiple lenders I talked to on a weekly basis as I am a syndicator. This is also basic risk management because you don't your revenue tied to any one professional/industry as it makes it hard to manage the risk in your loan book.