Hi Bigger Pocket Member’s,
I am considering joining the US Navy. I wanted to check with the Bigger Pockets community and see if anyone could share advice. Is there anyone that is currently serving that is investing? Is it possible to do when you are active duty? I was looking at VA loans and reading that people will buy while active and when they move they would rent it out. Do any of you have to refinance to do this? If so, do you have to put a down payment on the property?
Also is there any forums that might be recommended to join to talk to active and formally active military personnel that I might ask questions to? I am still not sure if it is the route that I wish to take, and think reaching out to a forum that is exclusive to this subject would benefit me greatly.
Thank You Very Much,
Congratulations on such a big step Ryan!! I am currently serving in the Navy, over 17.5 years now. I have done exactly what you are considering; I have used my VA entitlements several times at each duty station I go to. I will buy a property and live in it while I am at that duty station, then rent it out when I PCS. I rinse and repeat every couple of years.
However, you will have to take into consideration that the VA entitlements aren't limitless, there are caps you can use depending on the county in the state where you at stationed. For instance, I am here in San Diego and I can use a VA loan for a single family home/condo/townhome up to $650,000.
There are a lot of military investors on this site throughout the country that you can get in contact with for advice and guidance. For me, I like to buy and rent to military personnel because I know that they have a guaranteed housing income (unless they get in trouble at work or something and get it taken away) and will pay on time or my property manager can just contact their command.
Let me know if you have any further questions.
There are several military rental strategies I've seen. Looking at the E-5 BAH rate for the local base helps set the pool of people (E-5 family or E-3 roomates are most likely)--or use O-3 pay if you want to tailor it upwards. The VA has a funding fee that gets rolled into the loan, but there are percentage thresholds of down payment that lowers the fee considerably.
The other benefit is that by moving so often, you can keep house hacking with owner-financing, while still having the ability to cash out tax free beyond the 2-out-of-5 year IRS minimum.
Non-realestate investing, but if you join you will be under a different retirement plan than the 50% pension most people think of. Part of this is a funds-matching TSP---take advantage of that.
Finally, something to file under "investing in yourself" - while you may know of the GI bill benefits, while your on active duty you get up to $4,500 in education benefits per year you can use. Take courses, pay for a real estate licensing exam, etc.
It is very possible to invest in real estate while in the military! I am in and all of my partners (@Mike Foster , @Markian Sich , @Eric Upchurch ) have served as well. We have shown a lot of people how to invest while in the military and we have people doing it all the time. I am on my way to go look at a 62 unit apartment I have under contract soon so I know it is possible. It will take some determination and some work but you can certainly do it.
Originally posted by @Ryan Pryor :
Wow man, that sounds awesome and encouraging. Thanks for the post!
I realize it’s a couple hours South, but @Mike Foster is hosting a ADPI meetup in September down in Norfolk. You can go meet multiple military members who are working real estate while serving.
Originally posted by @Douglas Pollock :
@Ryan Pryor Many states do not have income taxes, and you can select which state you claim. You can change states too, but with some limitations. You can also consider where you might retire, and taxability of retirement income as well as tuition benefits or yellow ribbon status. Some states do not charge income tax as long as you are out of state, but so if you live there. For example, Florida does not have state income tax. That’s what I shifted to 20 years ago. If you’re reading this before joining your head is in a great place. A recent BP podcast has a Navy investor discussing a modified Dave Ramsey approach to real estate investing. If you are single, you could get a place and rent to peers or seniors, but if renting to seniors then proceed with caution. As an O1, O2, O3 I shared apartments, and even a house. If you own that apartment/condo/home you can make a great leap at a young age. Plus, if you practice recreation that’s low cost recreation (running, biking, parks, etc) you can save when it means the most (while young). If I only had the money back that I spent on alcohol when I was enlIsted and a junIor offIcer! There’s plenty who buy every PCS and hold the real estate.
Thank you for the information. You have to prove residence in that start though correct? I currently live in the State of VA and property tax is huge on vehicles. When I was living in the mid west it was much less in taxes.
The easiest way is to change your state of residence is to do it when you are assigned to that state. Even if its for school. There are other, more complicated ways though.
This is an awesome article. Thanks for posting it!
I'm an E-6 in Coast Guard Aviation. I bought a condo in Miami in 2009, lived in it for 2.5 years and when I was relocated to Massachusetts turned it into my 1st rental property. Since I left on orders I kept homestead exemption, and exempted you from having to stay in the house for 3 years. I eventually cash out refinanced, which freed up my VA loan. I used that for the downpayment on a single family home rental next to the town I grew up in. I'm about to close on my 3rd one in the same area. They cash flow really well, I have people I trust to look after them, and don't need to find different plumbers ect from having them scattered about the country. I'm back in Miami living in the 1st condo for my four years here. It is very possible to invest, and the steady job makes it easier to get loans.
Thanks for the information. This is very helpful.
@Ryan Pryor I am 24yrs old and been in for 6.5 years still active duty. Make twice as much as the median income in my area due to so many investment vessels (stock market, FOREX, RE, etc). You just have to do your research. There is a lot of things to be covered pertaining to the ups and downs. It's definitely possible.
One thing I do want to clarify is that, you have to pay taxes in the state you bought the property. With military pay it's different, you can claim that with what ever state you have your residence in (state you have your driver's license). However, any other income will be taxed based on the state's income laws you made that money in.
@Kaidan Mickelsen , Wednesday, September 19 at 7:30 PM – 10 PM at Keagan's Irish Pub 244 Market St, Virginia Beach, VA.
@Ryan Pryor . If you haven't already Signed Up - be sure to check out the Air Force. Probably much better location options than Navy.
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