Buying rentals in lower class areas near military bases?

20 Replies

Well, first I'll start with an explanation on what exactly this entails for those not clear of what generally compromises a bases surrounding area. Most AF bases are relatively in the middle of no where. Usually standard fast food joints in the immediate area+some small neighbors(though generally "low class"). Then 30 mins to an hour away you get your major "nice" areas. Most of the lower ranking guys will rent in the low class neighborhoods, then higher ranking enlisted guys and officers usually can afford the further away nice areas. I personally know of guys who are currently renting 2br mobile homes for 1200 a month+utilities at my base. Try 1500+ for any half decent houses. Even with the crazy high NJ propert taxes, I'm seeing great cash flow opportunities. Not to mention, I am military myself. A quick call to their supervisors will have any rent issues sorted out immediately(financial issues are taken very serious)

Anyone on here do this? I'm thinking about starting off with homes either in the 40k range needing light-moderate fix ups, or around 80-100k  that are fairly turn key. I'm just kind of looking at this and thinking,"if it sounds too good to be true, then you are prob missing something". I'm not expecting a perfect process here, but it just seems too easy to find good cashflowing properties knowing the rent prices and looking at housing prices.

my husband is active duty military and we are buy and hold investors! We buy in many small towns so I understand where you are coming from! That being said I think you might have missed something ;)

Even enlisted want to live in "nice" areas! Maybe they are in a b- area but certainly not the "ghetto"! So make sure you are buying in the right areas that would appeal to your audience! 

Also watch your expenses! Most guys will roommate up, which means you have a constant flow of people coming and going! It means you are going to do a lot of leases (trust me I know ;) ! ) 

The other thing you have is these places can turn Into a party house! So now you have higher expenses ! We self manage from afar but I wouldn't be able to with this class! So now add property management costs!

The last thing is military are not my favorite demographic! SCRA abuse is wide spread! While some commanders do care and are helpful you hear plenty of stories where they didn't care!

I have done so much better with civilians than military! I still rent to them bc we take care of our own! I'm just saying this demographic is less than perfect!

Good luck 

Well by lower class areas I certainly don't mean ghetto haha. Just maybe not an area thats considered  very desirable by most, though there are quite a few people who purchased houses in this area.  I'm not yet far enough into my learning to use the letter classification system I see people use, but if you are familiar with military bases then I'm sure you know exactly what I mean.

Roommates I expect, partying I expect, SCRA abuse is something I did not think of though! That would certainly add a very costly/unpredictable element to my plan. I know of quite a few people who have falsified dts orders to get out of leases(though only by adding an extra week or 2, even still, it certainly was not legit). 

That is definitely something to consider, but at the same time I don't think it is a deal killer. With the amount of cashflow coming(again just looking at the "book cover" if you will) it seems like I could factor in more vacancies than normal and come out with good profit.

Michael, you may want to think about using the term low income rather than low class.  Middle and working class works as a term, but low class seems to rub wrong.

I rent in low income areas.  It is a lot of extra work and cash flow can be eaten away with frequent and expensive turnover.  But it is working for us.

We live in an area that has very little employment, so I would think being near a base could give you a bigger candidate pool.  Regardless of the military aspect, I suggest you investigate low income landlording and deciding if that is a direction you want to go, or concentrate on better neighborhoods.

It sounds like it could be your niche.  You'd know what the tenants were looking for, and what matters or doesn't matter to them, and how to spot a good or bad apple.  

I'm not an investor, but was a manager.  Knowing your market is important in getting and keeping tenants.  And it sounds like you could get around the SCRA abuse, possibly, by being military yourself - knowing who to call and when to call BS, etc.

Good luck.

I'm in the exact same boat. I'm playing with the idea of embracing the transient life style of the young enlisted guys and putting each on an individual lease that has a higher rent that if it were split. I would look to add value for this higher rent by allowing easier lease breaking, providing monthly cleaner ( also a way to keep eyes on the property) monthly home cooked meal in the home and a driver for one night a month. By adding this value I feel that I could attract the responsible junior enlisted who are willing to pay higher rent to live in nicer areas with excellent amenities. I've felled this idea with several of the people I work with and they love the concept

Michael,
I would be interested to find out how you would market to the military members. Being retired and getting ready to do my first deal. Have you heard of new avenues that new personnel are directed to use? Such as websites for housing, areas to live. Vey good post and please keep me info mares on what you find out. Than you for your service.

Thank you

James

We, too, have a number of houses near an Air Force base in West Texas.  We like newer 3 beds, and have 1 4 bed, brick houses in a nice neighborhood.  A few tenants are in the oil fields rather than military.  We have the houses managed by a property manager who is familiar with the needs of the military community.  We set our rents at the cap of an E-5, since they are forming families, have achieved a bit of maturity with leadership skills...and there are many more E-5s than O-5s at this locations.  We haven't bought in the nearest neighborhood to the base, which is often dodgy, but close by.

I am former military, USMC, and looking into some NJ property. I have two rentals in PA and want to expand.  

If you are looking for a partner let me know. 

I hate reading about these generalizations about all members of the military. I am active duty Army, E-6. Not all military members like to live in "low class" housing. I currently own a condo in the best neighborhood in town, Class A neighborhood in Maryland. I also hate the fact that landlords and others think that because a service member can't pay that they should immediately to go the chain of command to get it sorted out. For one I think it's an invasion of privacy. Another, its quite childish in my opinion. Would you go to the Wal-Mart worker's store manager and tell them they didn't pay rent? NO!

Contrary to what many people will have you believe, including those in the military, the chain of command can't MAKE you pay your bills. They can highly suggest it through round about ways of threats but it's clearly stated in the regulation of ALL services that these things are civil matters and not the military's problem. These things could affect clearances but missing one rent payment won't kill your chances of a clearance. It's not the chain of commands job to be bothered with these small problems. A good chain of command will tell you it's not their problem and its a personal matter. I've never given or had a landlord ask for unit information. I would have not given it up anyways. If they can't trust me to pay my obligations, which I ALWAYS have, then we don't need to do business. Service members have enough babysitters at work already, I don't want to add my landlord to that list.

I've never bought around a military base, but we have done a lot of student housing around universities and it's worked very well. I've heard of others having luck around military bases. Having such a solid employer right next to your rentals adds a lot of stability. I think it's probably a good idea to invest there.

in my opinion it would be best to run your numbers and what your parameters are. (i.e. E-5 over 6 years) based on my experience as an active duty service member I would be more detailed in the contract for service members. buying property in more rural areas is a great start. with new jersey I do want to invest there, because that is my home of residence. I lived in Columbus and am familiar with McGuire AFB best of luck on your future real estate.

Originally posted by @Shawn Dandridge :

I hate reading about these generalizations about all members of the military. I am active duty Army, E-6. Not all military members like to live in "low class" housing. I currently own a condo in the best neighborhood in town, Class A neighborhood in Maryland. I also hate the fact that landlords and others think that because a service member can't pay that they should immediately to go the chain of command to get it sorted out. For one I think it's an invasion of privacy. Another, its quite childish in my opinion. Would you go to the Wal-Mart worker's store manager and tell them they didn't pay rent? NO!

Contrary to what many people will have you believe, including those in the military, the chain of command can't MAKE you pay your bills. They can highly suggest it through round about ways of threats but it's clearly stated in the regulation of ALL services that these things are civil matters and not the military's problem. These things could affect clearances but missing one rent payment won't kill your chances of a clearance. It's not the chain of commands job to be bothered with these small problems. A good chain of command will tell you it's not their problem and its a personal matter. I've never given or had a landlord ask for unit information. I would have not given it up anyways. If they can't trust me to pay my obligations, which I ALWAYS have, then we don't need to do business. Service members have enough babysitters at work already, I don't want to add my landlord to that list.

 Did you miss the part where I am military, and where my target audience are certain people who do choose to rent in these areas near base? 

Also, you are Army right? So don't tell me how the AF CoC command works. Our First Sergeants are very involved in making sure people stay up to date on bills, and it is a very big deal if they find out otherwise. Can they make them pay? Of course not, but they will suffer the consequences. If they are stiffing me on rent then I don't much care how it affects them. It was their choice to pay or not pay.

Originally posted by @James S. :

Michael,
I would be interested to find out how you would market to the military members. Being retired and getting ready to do my first deal. Have you heard of new avenues that new personnel are directed to use? Such as websites for housing, areas to live. Vey good post and please keep me info mares on what you find out. Than you for your service.

Thank you

James

 Targeting is pretty simple. In all the dorms on base we have boards posted for houses/rooms for sale. The vast majority of people I know renting found their house through that. Then there are a few companies who just deal with advertising for rental properties. I know a few who found houses through them

I work in a joint services unit. I'm well aware how you AF guys operate. Like I said no one can make them pay nor can they suffer any UCMJ or Non judicial punishment. You are one of the landlords that I am talking about. I would never give you my unit information. You would be the type to call the chain of command for anything YOU think is a problem. Sad.

Originally posted by @Shawn Dandridge :

I work in a joint services unit. I'm well aware how you AF guys operate. Like I said no one can make them pay nor can they suffer any UCMJ or Non judicial punishment. You are one of the landlords that I am talking about. I would never give you my unit information. You would be the type to call the chain of command for anything YOU think is a problem. Sad.

 Please stop posting here, thank you.

Michael,

In case you haven't noticed, this is a public message board. Obviously you don't agree with my opinion which is fine. I will continue to post my opinion on the subject because I think people should be informed that some perceptions and beliefs on how to handle military members are just plain wrong, unethical, or unjust. Thanks.

Originally posted by @Shawn Dandridge :

Michael,

In case you haven't noticed, this is a public message board. Obviously you don't agree with my opinion which is fine. I will continue to post my opinion on the subject because I think people should be informed that some perceptions and beliefs on how to handle military members are just plain wrong, unethical, or unjust. Thanks.

Sure, you win, you are 100% right, I'm wrong. Now let the topic drop please. You've stated your opinion so there's no need in further arguing it and de railing the thread

Hello all and thank you ALL for serving. Both my mom and dad served and are buried at the Brigadier General William C. Doyle Memorial Cemetery. Dad just most recently past. I visit often and I travel many different routes to get there to pay homage to all those that have made the simple things like BP possible.  

Just like NJ which is very diverse the areas around the bases are as well. I have always been interested in the opportunities to buy and hold and maybe flip in those areas. I have done 1 flip in a c+ senior sfh development in Whiting which is right next to the bases. Many older retired military service happen to live in this area. I think there is an opportunity to do both buy and holds and flips for the active and retired in NJ by the bases.

Even though property taxes are high per se (although a lot lower than where I reside) it is all relative in my opinion in the areas around the bases... There are not many opportunities to hit home runs but staying in the game by hitting a ton of singles and doubles is fine buy me....

Anyone looking to partner in any venue like I describe I am all eyes...

Wally

I am also prior Army enlisted.  While I am not going to take sides with you or @Shawn Dandridge ,I think the real point is that you should be screening out the tenants who you believe will need the intervention of their chain of command to make their rent payment (whether the COC will actually intervene or not). If you are renting to that type of person, they will probaby cause other problems than just non-payment of rent.

I  think that most military people do pay their rent because they receive a set amount of BAH.  They know that amount before they rent a place, so hopefully they are budgeting correctly.  So, in that regard I think you are on the right track by targeting a demographic with a steady job with funds earmarked for rent payments.  Good luck!

Does anyone invest around Picatinny Arsenal or the Dover NJ area? I went to Picatinny once to get my ID card renewed and saw a few newer apartment and condo complexes outside of post. I was wondering how the rest of the area was.

Free eBook from BiggerPockets!

Ultimate Beginner's Guide Book Cover

Join BiggerPockets and get The Ultimate Beginner's Guide to Real Estate Investing for FREE - read by more than 100,000 people - AND get exclusive real estate investing tips, tricks and techniques delivered straight to your inbox twice weekly!

  • Actionable advice for getting started,
  • Discover the 10 Most Lucrative Real Estate Niches,
  • Learn how to get started with or without money,
  • Explore Real-Life Strategies for Building Wealth,
  • And a LOT more.

Lock We hate spam just as much as you

Create Lasting Wealth Through Real Estate

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

Start here