I've made some money and am joining the Air Force - Advice Please.

8 Replies

I'm 25. Serving in our military is just something I've got to do. I hope to ship out in a few months and would like some advice on what to do with the cash we've made in the past few years. 

Currently own 3 properties. 

The first is under contract and set to sell by months end. This will free up about $90,000. 

Property 2 is currently undergoing rehab. Expected net will bring us to $150,000 liquid. 

This is where I am hoping for input.

Property 3 my wife and I live in. Bought it about 6 months ago for $245,000. The comps put it at $320,000 after rehab (bringing us to $190ish liquid if we rehab then sell). In these past 6 months I've decided to pull the trigger on joining the military. This forces us to do something with this last home as well as figure out what to do with the $150,000. The military contract will be 6 years and I'm not a big fan of just hiding it under a rock aka sitting in the bank. 

We could refi down to a $200,000 (80% ltv to avoid pmi) loan value using about $35,000. Rehab a few minor things ($10k) to rent out over the next few years... buy 2 others as rentals around $140,000 . This would keep about a $30-40k reserve for repairs and our own personal savings. Arguably this is risky since I've no experience with rental properties. 

Thanks for your time and input folks, 

Don't stop investing because you are joining the military. The first 6 months+- will be a bit difficult depending on your job, but I would recommend  continuing  with you current investment strategy and adjusting it as you go. You'll get a feel for the amount  of time/effort  you can invest in real estate.

if your long term strategy  is flipping then keep flipping. 

If your long term strategy  is buy and hold, then start doing that.

there is a level of  risk with all investing. Try to mitigate  it as much  as  possible, but don't  let it stop you from moving forward.

If you have any questions  about the Air Force PM me and I'll  give you honest answers! GOOD LUCK!  

Having been in the military, my primary advice would be don't join the military.

While irrelevant, given the 6 year contract, I'm assuming you're pursuing something beyond basic enlisted. Are you being enlisted with a special job, or are you being commissioned?

I know a common thing for military members is buying a property in every place they get stationed in, and renting it out when they leave. I WISH I had know about this when I enlisted in the Navy at 17. I would be in a much better position now.

It sounds like you are flipping. While I'm definitely not an expert(just someone who reads a lot), my recommendation would be that you turn some of that money into buy and hold. Military areas are good for rentals, for obvious reasons. Do you know where you're going to be stationed to begin with?

@Lyle Quillin  I'm an airborne infantryman in the Army. I've been on two deployments to Afghanistan in the last three years. It's been hard but that hasn't stopped me from investing. In the beginning you may have to slow down as you re-learn a new area and technique but if you're put into a lower priced area those cash reserves could kick start you on your way. Thanks for your service, good luck.

@Lyle Quillin  

I am active duty now and would like to give you some recommendations but I think we need more information.  For one, when you say "shipping out" what do you mean?  Do you know where you will be stationed?  What will you be doing in the air force and when will you deploy?  Are you interested in being a long distance landlord?  Can your wife/does your wife want to handle things while you are on deployment?  Will you continue to invest where you are now?  Do you have a good network to help you there while you are out of state or country (it sounds like you may with all the rehabbing you have been doing)?  What are your overall RE goals?  All of these things will come into play when making a decision of what to do with the cash.

I had a few primary residence turned into rentals while I was on deployment but didn't really get active until I was on shore duty and certain I wouldn't be deploying again.  I don't think my wife would be too happy with me if I dropped the business we have now on her while I was gone.  A good management company could help in that regard though if you have rentals.  

Look forward to your response and I think it is an honorable thing you are doing by serving your country.  

I want to start you by congratulating you on following your dream!

Joining the military is NOT a death sentence to your real estate dream. My husband is active duty Navy. We have turned being active duty military into an AMAZING asset. Yes thing will be VERY different. But thats not a bad thing, just different. We have bought 5 houses in the past 3 years and if all goes well will have 10 in 5 years. I can honestly say if it wasn't for the fact that we move alot and have a solid W2 income  we would be where we are today. 

You will have to adapt and change, but if you look at the new real estate challenge as an adventure, I bet you might do better than you ever thought possible! For us, my husband serving his country have done amazing things to our "empire". While I would never have chosen any of our paths, they have worked out better than I ever though! I had the opportunity to talk about our "story" in podcast 103. 

Good luck and if I can help! PLEASE pm me!  

You can do EVERYTHING! Good luck!

Wow, seriously this is an incredible community. Thanks for the encouragement and direction. Hats off to all of you Vets and active duty folk as well. 

Working on enlisting as a PJ. battling a financial waiver at the moment given the amount of business debt compared to my future salary. Workaround package should meet the commanders desk this week. This is keeping me from getting a firmer ship date but I hope for it to be by late May. 

I really like the buy and hold near military bases strategy. Are they these types of properties usually able to see a fair cash flow (assuming you use a 20% conv.)? What kind of vacancy factor should be used? How about maintenance reserves, given that military are often younger men and sometimes live together? Other things to look out for or things I can glean from your experience?

:: Quote ::

I am active duty now and would like to give you some recommendations but I think we need more information. For one, when you say "shipping out" what do you mean? Do you know where you will be stationed? What will you be doing in the air force and when will you deploy? Are you interested in being a long distance landlord? Can your wife/does your wife want to handle things while you are on deployment? Will you continue to invest where you are now? Do you have a good network to help you there while you are out of state or country (it sounds like you may with all the rehabbing you have been doing)? What are your overall RE goals? All of these things will come into play when making a decision of what to do with the cash.

:: End Quote :: 

Long Distance Landlord - I'm open to any challenge as long as the risk can be calculated. 

Wife interested - not a ton but she can answer the phone when the property management company calls... shes a nurse and doesn't really like the idea of this kind of business responsibility.

I think the only feasible way to continue investing in Fresno is to buy a few homes to rent out prior to BMT. 

As far as RE Goals... I don't have a goal just yet. Up until this point it has been flip until we have enough to buy a rental or two and continue flipping. What are your goals? Realistic goals for me to consider?

Thanks again, 

@Lyle Quillin   Looks like you've done well flipping! I wish I had $190k liquid at 25. I guess it's probably too late, but it looks like you could make a lot more money in real estate than in most anything else.  Having said that, congratulations on your success and thanks for your service.

@Lyle Quillin  I see great returns with my houses near military bases using 10-20% down.  When I run numbers I factor in a month of vacancy but most times I am turning the house in a week or less.  The last turnover I had was a negative vacancy in that the previous tenant paid for the whole month but moved out early and the new tenant moved right in.  All of my properties are in A type neighborhoods with high rent figures and in very high demand.  That helps.   Maintenance reserves will depend on the age of the home and can really vary significantly.  Look and see the age of the mechanicals, roof, appliances, etc... Not everything can be foreseen but these certainly can and you will want to put money aside for the time inconvenient time they need repair or replacement.  Biggest thing I can recommend is be strict about your tenant screening.  Brandon Turner wrote a great post on tenant screening that you must read.  Sometimes when a property sits vacant it can be tempting to get someone in there that doesn't fit your criteria, don't do it as you will most likely regret it in the long run.  I just had this come up recently where I almost bent my rules to fill our house but I decided to stay true to our criteria.  Who knows if I am right in the long run but I'm glad I stuck to my guns.  It sounds like you will use a property management company, be sure to vet them and make sure you interview them.  You should be asking them questions and get them to sell you their services, don't feel like you should be selling your property to them.  Find out what they can do for you, there are a lot of bad PM out there so do your homework. 

As for your question, my goal is to have enough cash flowing passive income from rental properties to supplement my military retirement in 8 years without reducing my families expenditures.  That way I can retire, invest full time and spend lots of time with my wife and kids.  To do that I will save as much money as possible to invest, flip houses to build capital, and leverage my current income for loans on properties as much as possible to build my portfolio.  I also use my rental income to help me max out our IRAs and 401k every year.  Those are my goals, I suggest you come up with yours so you can find the best path to get there.  And write them down somewhere so you can hold yourself accountable. 

Good luck and enjoy your time in the service, you will get to do some great things that most people will never understand.  You will also meet some people that you will have a life long bond with and would happily lay down your life for.  

Create Lasting Wealth Through Real Estate

Join the millions of people achieving financial freedom through the power of real estate investing

Start here