estate pro-folio while serving active Duty in the military

11 Replies

Good day everybody, as my title suggest I’m A active Duty service member and I am looking to start my journey to financial freedom by diversifying my income within real estate options. I am completely just beginning at this, so any info will help much. Anyone have ideas?

@Ladarius Peterson , hard to say without knowing more about you and your situation.

I would start with, always live off base if you can in order to take advantage of your BAH. Live in properties that will make good rentals when you PCS, multi-family if you can find it. Learn what makes a good rental. Buy everywhere  you PCS to if the market supports (I did not buy in Cali when I was there, or NOVA). Live below your means. Don't drive your typical military mobile (stupid big tricked out truck or souped up gas guzzling hot rod).

Max your TSP. If you deploy save your pennies for investing not toys. If you are in a combat zone you can contribute somewhere close to $50k to your TSP vice the standard $18k. Do that. Contribute to the Roth version of the TSP, not the traditional.

If you are smart, the military offers huge advantages to wealth generation. The vast majority do not take advantage of them.

Great advice. My situation isn’t anything extraordinary, I’m 25 years old. Have a family and two children. Been in about 3 years now. I recently bought my first family home which I occupy. Looking to build assets while I’m serving in the navy. I definitely plan on keeping my home and renting it out if I was to PCS elsewhere, but I also would like to have a additional rental property like a duplex or another house while I’m here in Virginia Area.

I agree with @Edward B. on simply making sure the numbers work, and not buying in high-priced markets.  If you end up in San Diego, it'll be really hard to cash flow.  Same with NOVA.  

As for the TSP, figure out your long-term plan. Maxing out your TSP may not be beneficial, depending on your rank, income, and family situation. $18k/yr is a lot for a 25-year old with a wife and 2 kids. Plus, you can only marginally use that money over the next 35 years.

But it still helps to have some cash to invest. Just understand that purchasing another home in Virginia will constitute an investment property, and you'll have to ante up 25% for a down payment. A second VA loan doesn't work for this duty station, unless you qualify for one of the few exceptions. If you have the credit and cash available, you have a lot of options. If you only have a couple thousand in the bank, you're pretty limited in what you can do, unless you find the alternative financing options that so many on these forums discuss. And I would hesitate to use anything other than conventional lending while just getting started and on Active Duty, because small mistakes can ultimately put your security clearance in jeopardy.

Not knowing a whole lot about your financial situation, I would recommend playing it safe. You hear about all the wazoo things people do on these forums, but so many have the luxury of doing REI full time, and aren't burdened by the time demands of military service (or a young family). Live frugally, below your means, save as much as possible (invest in an index fund), until you have the cash available to do it right. If you do have the cash, run the numbers several times, then ask a couple other people to run the numbers too. Use overly conservative estimates. And use the first investment as a learning experience. Don't worry about making a ton of money; just worry about not losing money.

Ladarius, I’m on active duty as well and I’m stationed at Ft Benning, GA right now. I’d love to chat about military investing, feel free to reach out. Email/phone are in my profile.

Either spend some time studying @Amanda Han 's book on tax strategies for real estate investing, or hire a professional. I see lots of military (and civilian) real estate investors who have tax problems they could have avoided if they had spent some time or money up front learning what to do (and NOT do).

Best of Luck with Your Real Estate Investments! 

Use HELOC to pay off mortgages fast.

Good schools and safe neighborhoods are a must.

Put money in whole life for the whole family. I pay less than a hundred for my 11 year old, paid up in 20 years with USAA. Northwestern Mutual is better but I am loyal and love to be called Captain.

Built up cash in LI cannot be sued or taken by the court like in checking or savings accounts.

Borrow that out and never pay off rental right away. Once the tenants paid it off, borrow that equity and buy more rentals. Keep up 300,000 liability insurance on rentals, and no LLC is necessary.

Well appreciate that sir! A few questions about the term you used. “LI” exactly what is that?

Short for life insurance

Really liked some of the info in the previous responses. I strongly agree with “buy a home for your family where the numbers work as a rental”! I see so many military buy a big fancy single-family, they PCS, and they can only rent it for less than their mortgage (or maybe break even). This is not a good idea. This will require sacrifice on the part of your family too. They will see other families buying nicer homes. Most of the time a good rental will be in a solid neighborhood, but it won’t be huge, it won’t be new, and it won’t have granite countertops. But spend a lot of time learning how to run the numbers.

Second, and maybe you know this already, but it took me awhile to understand this. Putting money in your TSP (Roth) is as good as cash. When you qualify for a loan, the bank considers it the same as cash (this is not the case for other investments). Also, you can borrow from it (easily) at the same interest rate as the G fund (very low), BUT here’s the best are paying the interest back to yourself! So, yes, put money in that TSP!

I agree Cash value life insurance is a good idea and would advise that you do some research about them so you feel more comfortable with the strategy. I would also suggest that you do some networking and connect with partners who are full time in real estate. Learn, out sweat equity into the partnership. Work on knowledge capital and strategies and your credit. If you want to leverage debt as a part of your strategies be lendable. 

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