Not sure if this fits here or not. But I am looking at investing around military bases, SFR 1-4 units properties. I am looking for others who have had experience in this arena. Just curious as to the success and the potential failures that may loom behind the bushes. Any help or comments will be appreciated.
I just finished my first investment in Killeen, this is a lower income area near military bases. It's a duplex - 1 side is rented, the other side I completed my first eviction this weekend. I can keep you informed about any positives or negatives but so far, all has been fairly smooth as the cash flow potential seems solid.
Ask away if you have any questions and I will answer them as I can with my limited knowledge, but I can also share the experience as I go.
@Keith Light the pros and cons are somewhat different but a lot of the same exposures too. Having been a service person I feel that the rental structure is a lot like a college town. Sure you'll have good and bad renters but you could have people who deploy and there are very specific federal rules under the SCRA (Servicemember's Civil Relief Act) that protect service members. For example, if an deployed person stops paying rent...you must get a court order to evict them. That's kind of a big deal. Now the SCRA is not designed to prevent service members from paying rent, but allows them protections when they are unable to do so. If you are ok with that risk, then most of the other risks are similar in nature.
Hi Keith! I live in a military town (right outside of the 29 Palms Marine base) and @Andrew Postell hit the nail on the head: it's like renting in a college town. I am also prior enlisted so I have seen a lot of patterns investing in these areas. Especially looking at multi-families right outside of base, you'll get a lot of E-5 and below. My town may be different than yours since it's almost the middle of nowhere, but human instinct is the same. Around my base, you get a lot of young male adults wanted to party and get wasted. If you price your units too low you'll run the risk of getting tenants who get paid to live out in town or will crash with a bunch of their friends. How do I know this? I totally did the same thing!! Also, Andrew is right if there is a high deployment rate in your area then a lot of your tenants will go in and out. Even if their wives stay behind, a lot of them will want to move back temporarily to be with their families.
Overall: Be aware you might have some damaged appliances, price it high enough so your tenants care about your property, in your contract ensure only a certain number of individuals may reside in each unit, and expect a medium turnover rate since you may not have a lot of long-term tenants. The good thing with military is they have a guaranteed income and you can complain to their command if something isn't sitting right :)
@Federico Portalupi Thanks for the feedback. Ft. Hood is actually where I am looking. It seems like a decent area to get started. I was specifically worried about being over extended in that market. I don't want to have a large percentage of my tenants go on deployment leaving me to foot the note(s).
@Andrew Postell Thanks for the feedback. I had assumed it would be very similar to college rentals. The opportunity for good cash flow exists but with that comes a higher potential for a bad renter. The SCRA is exactly what worries me. Like you mentioned its not a law in place to prevent non-payments but it could be a hassle.
@Krystle Padilla Thanks for the feedback and specifically touching on the spouses. That was one variable that I was hoping would be in my favor. If, the spouse deployed that they would at least want to stay in the property and continue paying the rent vs. moving out to live with family. I know that is still a percentage game and sometimes they will and other times they won't. I guess in the long run it would be cheaper to store your stuff in a storage unit vs. renting a property while on deployment.
@Keith Light & @Federico Portalupi , Hi guys, I am considering starting my first rental property around the Navy Air Station in Kingsville, TX. My aim is to target young military families and pray that when a spouse deploys, the rest of the family stays back.
Would you be kind enough to sharing more of your experience so far with your renters. Outside SCRA, what other trip-wires or cause for concerns should I be looking for? Thanks
The previous mentioned issues with it being like a college town are probably some of the strongest bits of advice.
One way to avoid this, try to scale the type of rental to aim more for the senior personnel in that finding a larger home that you could ask a rent around their BAH. That being said, it may be hard to find a deal in that realm.
Turnover costs are something else. Most servicemembers are relocating every 2-4 years and some with deployments in between then. This can really be a drain on profit if your painting and paying for cleanings every year. The most important thing to remember here, vacancy costs.
Finding a rental that has the potential to target a strong job market and a military community may be best for a first investment. My first was in El Paso, Texas right outside Fort Bliss. I have gotten lucky and got a local LEO in there that will most likely be there for the long haul, or until they decide to purchase their own.
One way to combat the idea of partiers and people that do not take care of your property call their command. If you're still active, finding out who their commander is not that difficult and will certainly take care of any significant issues. (Not to be used for petty stuff)
@Oluyomi A. . Navy Kingsville is a Navy Pilot Training Base. You will find a lot of Young folks - but IMO not a high percentage of folks being deployed.
The general scenario is the student pilot will arrive and spend approximately a year learning to fly airplanes and become a Navy Pilot. There will be some dropouts, but the vast majority will complete the program, get their Naval Aviator Wings, and move on to other assignments / locations.
Coincident with the student population is the permanent party Instructor cadre assigned to Navy Kingsville for probably a 3-4 Year Tour. Some will buy homes, most will rent.
Then their is the base support population that will mirror any other Military Facility, lots of young enlisted, and the lesser number of Senior Enlisted and Officers.
Generally speaking, expect more wear & tear if you are renting to younger folks. Mid-level and Senior folks will be very responsible in paying rent and taking care of the property and will expect you to be responsive to any Landlord required actions.
Hope this helps!
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