Rental property near Military base (BAH)
Rental Property Investor · Greensboro, NC · Member since 2015 · 17 posts · 5 votes
Anyone have any experience in renting to military families. Pro's and Con's of the BAH (Basic Housing Allowance), turn over rates, best ways to market rentals (ie how to get in military lisitings), and are there any building codes and/or inspection requirements when dealing with BAH? Thanks in advance.
I manage about 80 rentals in Columbia, SC and about 60 of them are rented to Soldiers at Ft Jackson. I find soldiers to be better than your average tenant. They almost always pay on time several pay by auto draft, and they usually are pretty responsible people in general. And they are used to having to leave the place spotless from on base house standards.
@Frank Closer . . . It can really be based on your market area. . . What type of units are on the installation you plan to market to? For example, if I rent to Soldier near an installation that has more deployable units, then it is likely that within 10 months of a lease agreement, that Soldier might clause themselves out of the lease to support their unit elsewhere. . .
I see that you are in the DMV area, which is saturated with military, gov employees and contractors that support the military. . . When I was looking at investment properties there a few years back, I looked at the public transit system. . . Just like NY, you have a great subway system there and since traffic is one of the biggest headaches, and parking, then you may want market to those that don't want the hassle. . . just food for thought. . .
JT
BAH is an amount given directly to the service member, the amount they received is based on several factors like the area (each zip code has a different rate) and whether the service member is married or has children, and their rank.
My old duty station had one of (if not the highest) BAH rate in the county (San Francisco) and I think we got somewhere between $1,900 to $2,400 depending where in the bay area.
I'd do some research to determine what a single person, rank E-4, in the area of your rental to get a baseline or general idea:
http://militarybenefits.info/2016-bah-basic-allowa...
As far as renting to military members themselves, your experiences will vary as your target tenants could be a responsible 37 year old with 20 years of military experience (and discipline) or an 18 year old kid who is going to do what anyone his age would.
@Josef T. we still receive BAH when we deploy. If you are getting claused out for a deployment vice a PCS then you are being taken advantage of. Now a smart single service member will structure there lease length so they are able to move there stuff into storage and pocket the BAH while on deployment, come back and buy their own house.
@Ryan Jackson, yes, your example of a smart service member is exactly what I meant by that statement. . . Most leases do not distinquish between PCS or Deployment order types and most landlords/investors are not going to argue with a service member when duty calls either. . . And unfortunately, not every move is planned out, I have witnessed too many 'hey you' moves that a service member just cannot anticipate thus disadvantaging them from structuring their lease, other than to ensure there is a military clause in it. . .
The Servicemembers Civil Relief Act states: a servicemember who receives permanent change of station orders or who is deployed to a new location for 90 days or more the right to terminate a housing lease
I understand, at the end of the day, this is a business and we, as investors, are looking to produce a profit at the end of the day, yet maybe because I am biased, I believe when dealing with military members (Active, NG, or Reserves) , especially during that lease process, it takes some additional conversations. . .
JT
@Ryan Jackson, if a military member gets deployed and clauses out they certainly are not abusing the system at all. As @Josef T. stated, the SSCRA covers deployments and if a service member is smart they will certain take advantage of that.
BAH just dropped about 10% in Honolulu, Hawaii for 2016. Although service members who are already here will not see a decrease in their BAH, those moving to Hawaii or experiencing a chance in status (Marriage/Divorce) will see their rates drop. I suspect that on Oahu, which has a good number of service members, will see rental rates stagnate in the coming years.
As far as the SCRA goes, be careful. It's very friendly to service members, especially with lease terminations. Service members also get free legal assistance that advise them on these kinds of matters, so they should know their rights. With that said, if you offer incentives (eg, a month free with a 12 month contract), you should familiarize yourself with how that works when the Soldier gets a deployment order 6 months after signing the lease. Unless you were smart on the front end, you might be stuck with the service member breaking their lease AND receiving the free month of rent.
Frank,
Aside from the above replies about the Military Clause. It is advisable for you to contact the local housing office. These offices have staff members who will work with potential realtors and rental agents to list properties fro rent on AHRN.com. Site like this and the local office posting will provide you the ability to reach the desired military community.
A typical lease is for one year. Others include month to month or 6 month options. All of these are vetted through the housing office. You can require a deposit and first months rent upon signing the lease. Military members are provide legal assistance in case of disputes. Also they will use the housing office to review any and all leases signed.
Most bases will have an individual conduct an inspection, basically to see if it meets the basic living standard for a service member. But not sure if this is universal.
BAH changes. Sometimes it goes up or down. It is best to stay tuned to military.com to find out any late news on these issues. However, like state above in responses, if the BAH goes up or down, if the lease is locked then the Service Member is responsible fro providing whatever the agreed upon amount is.
Hope this helps.
v/r
@Andy Gross is right, the BAH did go down about 10% in Hawaii. Not sure for the rest of the nation. The plus side is that service members are being smarter about their money and I'm seeing more armed forces member become more (one of @Joshua D.'s favorite words) frugal. Military members aren't utilizing their entire BAH like I've seen them do in the past. My buddies are getting a decent 1 or 2 bedroom and making it work.
On the base we have bulletin boards around mass populated areas. Search these billboards for information. You may find someone's card there or maybe a service that can guide you in the right direction. I agree with @Stuart Spicer about checking with the local housing office as well. Cheers.
I have a property that is 6.5 miles from NSA/Ft. Meade. I've always thought renting to the military would be a good option. For someone like me, who knows ZERO about what the military is given regarding allowance, what happens when they are deployed to their rental, how does being in the military affect their allowance (i.e,. can they lose it if they do certain things, like a subsidized tenant can get kicked out of a program for doing something the program deem improper), etc., where would be a good place to start researching that information?
Thnx in advance!
I live in base housing at Kirtland AFB, my wife and I have looked into buying rental properties here and it can have it's issues, but from all the research I have done, it can be a VERY good situation for an investor. You can set up the allotment to you instead of having it go to them first which is nice. You might have turn-over, but you can prepare for that.
You really need to know your area though. From what I've seen around several different bases is that the immediate area surrounding the base (where it would make most sense to have rental properties) is a REALLY rough area where your potential tenants would not want to live. While that can be managed, it would increase your turn-over rate more than the typical turn-over issues with military. So looking outside of those areas and finding those good markets in that town is highly suggested, and what I'm currently doing.
Hope that helps, and feel free to message me for more details, or we can continue the discussion here!
Christina R. ...One place to start is to review the 2016 Basic Housing Allowance for your area:
http://militarybenefits.info/2016-bah-basic-allowa...
Then do a "google" search under Soldiers and Sailors Civil Relief Act and review information on leases with servicemembers. These typically focus on when an servicemember can legally break their lease.
A quick review of such is below:
Military.com
The SCRA makes provisions to allow a servicemember to terminate certain lease agreements as described here.
Lease of premises occupied, or intended to be occupied, by a servicemember or a servicemember's dependents for a residential, professional, business, agricultural, or similar purpose if:
To terminate the lease, the member must deliver written notice to the landlord at any time after call to active duty or receipt of orders for active duty. Oral notice is not sufficient. The effective date of termination is determined as follows:
We've rented to active duty military since Fort Gordon is close to us. We've never had to go through an inspection from anyone on the base. www.ahrn.com (automated housing referral network) is a good site to post rentals on; it is free to do so. www.militarybyowner.com is another; it is not free but not very expensive and because they charge there is less competition on this site.
Good luck..
Gail
I manage about 80 rentals in Columbia, SC and about 60 of them are rented to Soldiers at Ft Jackson. I find soldiers to be better than your average tenant. They almost always pay on time several pay by auto draft, and they usually are pretty responsible people in general. And they are used to having to leave the place spotless from on base house standards.
Great information - thank for pointing me in the right direction. Years ago I remember I was at a RE meeting and somehow we got on military housing/base housing etc., and someone in the group was saying that if a military tenant violates provisions of the lease you can report it to their commanding officer/dept, so that was an incentive for military tenants to stay the course, so to speak, with the rental. Is this true or just something akin to say a Section 8 lease where if a tenant violates participation rules they can lose their voucher?
When you have a serviceperson fill out your application (or sign your lease) have them provide you the name of the commanding officer.
If they, for example, fall behind on their rent, a call to this person will often straighten out the issue. They will not lose their housing allowance.
Very rarely these calls are needed if you are dealing with new recruits since they tend to be young kids.
Gail
All,
I see nobody has mentioned AHRN.com. It is a website that is only accessible to military members, as you must use an official military email address to create an account. The website allows landlords, property managers, and realtors to list property; obviously without needing the official email to list. The website is managed very tightly and, although there is a section for real estate for sale, it is rarely used in my experience. There are also slightly different expectations for military members looking for rentals on this site. Such as they expect to not pay an application fee at all. They expect income verification to be as simple as handing over an LES with the SSN cut out(military pay stubs), and also for the landlords to already know about military clauses/addendums.