Looking for Advice - Short Term Rentals in Military Community

7 Replies

Hello Everyone!

I'm looking for a little feedback on an idea that i've been contemplating. I own about 40 acres of land in a growing community near a major military base. I am considering building a duplex at the front of my property for the purpose of short term rentals. Our land is located about 15 minutes from the base.

Ideally we would market to service members that are still looking for housing. The military pays families for 10-days of hotel stays as they search for housing. The military will pay up to $99/night. 

We would also be able to market to people that are on temporary duty or to extended families that are visiting.

The advantage of staying in a duplex on our land include:

1) Full Kitchen

2) Ample parking for moving vans, trailers, boats, etc

3) Washer/dryer in unit

4) Pet Friendly 

5) More space and privacy than a hotel

Potential Disadvantages:

1) Cost to build: I expect that the cost to build the duplex will be around $85/sq ft. If we do 1,000 sq ft/side - we will be around $170k

2) 15 minute drive to post

3) Our land is not in the city

4) Providing cable/internet would be expensive because we are not serviced by major cable companies.

I feel that $99/night would be a value, but there really isn't any similar options in the area to compare to. The closest thing to what we are offering are extended stay places. 

Any advice is appreciated....

I think it is a good idea. You could advertise on base bulletin boards and Homeaway.com.

Use satellite TV.

I am retired Navy and I can see a need for this when people are transitioning to this new location.


Well with this idea you have to consider that on a military base usually will be a place for the service member to stay while waiting for a slot to open. Also outside of base at hotels or motels they usually offer a discount for military members. Being 15 minutes away Is not to bad, but you have to find a way to advertise to these specific service members in transition. Also how would you cover a 10 day rental? Would there be a some kind of agreement signed between the two parties? With 170k for a duplex you have to do a lot of research and find out the numbers in the area to see if and how you can attract the majority of service members in transition.

If it is in a good area only 15 minutes away from base why not look into long term?

I think it is a good idea since there always seems to be people looking for short term stays with their pets when PCSing.  However, I also see a lot of potential problems with this model.  You will basically be running a hotel/motel/vacation rental in the form of a duplex.  Do you want to be active or passive because I see this as pretty active?  That includes marketing, move-in/move-out inspections, key exchanges, running a credit check each time?, possible evictions if someone doesn't leave, etc...  You will need to furnish these places, have them cleaned daily or have some sort of agreement with the tenant as to cleaning schedule for the unit, maybe they are responsible and you just have to clean up when they leave.  Utilities as you have already touched on to include water, sewer, trash, electric, gas, cable, internet, etc...  Is there a short term tax law in your state?  In my area, if you are renting for under 6 months there is a hotel tax associated with the stay.  Most people pass this onto their tenants but it is something to keep in mind that may or may not apply to you.  Credit card fees if you are going to take credit cards like most hotels do.  You will basically be running a vacation rental but catering to the transient military base folks.  I recommend researching vacation rental posts and strategies as this will relate more to that area and there is a lot of expenses when you get into that world.  The only way those folks stay afloat is due to the high rental rates they can charge.  I don't think you can charge a high rental rate to cover your expenses in this case, unless you offer something the hotels don't and can charge more.  I know a lot of pet owners who will pay out of pocket on top of what the military reimburses for so Fido can stay with them while they are waiting for housing.  Maybe that is your niche? 

Good luck and let us know what you decide.

Justin, while I'm new to REI, I agree with the reply posts thus far... There is a lot to consider to your business plan and as a retired Marine myself, the military essentially caters to service men and women in relo transit and also has several options for visiting families and friends. It would be hard to compete in this space. Now what you may be able to capitalize on is military contractors, although this target market is especially small.

One other point of advice that I recently received from a seasoned RE developer was that if you don't have experience in real estate development the odds are stacked against you and it's the "Third guy" who usually benefits from the infrastructure you develop when they buy your property, business, or both for pennies on the dollar when/if you have to execute on an exit strategy.  I was looking at purchasing beach front raw land down in here in FL recently and while everyone loved my initial business plan, every layer or due diligence displayed another 100k of Capitol that I didn't anticipate because of zoning, environmental, and regulatory restrictions regarding development of said land.

I know you own the land, but have you researched the regulations surrounding the base?  (I.e. Restrictions related to Elevation, zoning, power, water, sewer, etc). Usually land that close to military base is wrought with restrictions because of live fire arms and ordinance ranges, air traffic, density regulations to handle basic utility infrastructure, etc...

I love the thought process your after but sounds like it would be best left to a sophisticated investor who has experience both in development and government contracting.  

@Tim Zimmerman

@William Allen

Thanks so much for the great responses from everyone. Definitely a lot to consider with any plan the requires building new vs. existing.  We are buy and hold investors, so unless we had a major shift in our lives we probably would not look to sell the property. 

The main benefit that I see with building on our land is that our primary residence is only abut 200 meters away. Cleaning and turning units would not be a huge inconvenience. Since we live in the county we only have to deal with county zoning (multi-family is allowed). Our land already has city water/electric. This would make us more active in our investment, but I actually kind of like that......Or at least I think I would ;)

One more tidbit of information: my wife and I plan to eventually move into event hosing on our land (weddings/b-days/corporate events) at a barn (to be built in the future). I feel that having access to short term rentals for brides/bridesmaids/grooms/families is a whole other area that we can grow into. 

The fact that it will cost more to build vs buy existing is almost just a fact that I accept. I think I can capitalize on the business in a way that will offset the cost to build (but I may be dreaming).

I can buy homes for 50 - 60 cents on the dollar in my area all day long. We do that and have reaped the benefits, but this move would be more of an active business that we would be building to augment our passive investments. 

At the end of the day if I spend 20-30k more on each unit to build on my land its not really going to hurt me financially. 

Ok - now for the reality check!!

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