Military Men and Women

38 Replies

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,

Ryan

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. 

@Joseph A Rangel Thank you for the reply. I’m happy to hear that it is being done and is possible. Hopefully I get stationed in SD too! :p. Do you know how often sailors head to sea? Do they stay out long and do they stop paying rent while they are at sea? Have you ever lived in a house and rented out rooms? Thanks Again, Ryan
@Mike Benitez Hi Mike, Thank you for your reply. I am was wondering if you know how often military gets relocated? Does it depend on the branch? When you bought these houses and relocated, how do you manage it from afar for( for maIntenance , rent collection, and advertising)? I wasn’t aware of the retirement plan, thanks. I will have to look into that for sure. Much Appreciated, Ryan
Have any of you had problems with renter? I heard there is a way to report bad tenants to their CO in another post, but I’m not sure if that happens a lot. Thank you all for your service, Ryan
I had one more question about taxes. How does it work and can you claim your own state instead of the stat you love in? I have family in a less taxed state and might just use that address if I could.
Originally posted by @Ryan Pryor :
@Adam L.

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. 

@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.
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.

https://www.military.com/paycheck-chronicles/2015/02/27/residence-vs-home-record

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.

@Ryan Pryor some pile-on advice. If you score high enough to be deemed a quality recruit, you have some leverage with the recruiter. Ask if you are eligible for the Navy College Fund and that it may sway your decision to enlist. Not to be confused with the GI Bill or the Tuition Assitance I mentioned earlier, this program is a kicker to the GI Bill benefit. It adds roughly $400/month to the 36 month payout (amount rises every year due to inflation). I've used all 3 of these benefits. My bachelors and master's were paid for without touching my GI Bill. Then I transferred my GI Bill benefits to my kids. Due to the kicker and a few small scholarships, we expect the benefits to pay for one of our kid's college education, and half of college for our second. https://www.military.com/education/gi-bill/the-gi-bill-kicker.html

 @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. 

@Ryan Pryor As active duty military you have a few perks. Normally each state sets its own residency requirements which often require occupying a property for seven months each year. The natural options are to claim the state from which you entered service, or the state you are first stationed in, but a state like Texas (check to see if it has changed) will accept your intent to live there after serving without penalty if you don’t. If you get married, your spouse can usually claim either the state she is from, or the state you live in as you PCS. I would seek competent tax advice, but if your spouse is working a regular nine to five type job (hourly wage or salary) then the choice will probably be straight forward. Again, states often have a few perks for military so looking into things like education or credentialing benefits for spouses could be a factor. Selecting a state is as easy as going to your S1 admin (HR Delartment) and telling them you want to change which state you claim for taxes. They may even have some info on hand to help you make a decision.
@Douglas Pollock I almost forgot! Some states, like Georgia, still have first time homebuyer programs. So, when you get your first assignment, Google the state and first time homebuyer. Also, be aware that you may be forced to live on post if you are single and junior enlisted. E5 and above start to have more options, but even as an O5 officer at Fort Hood theu were pressured to live on post. If renting to military, keep in mind that 30 day orders can be used to break a lease. This may affect your vacancy rate especially if it’s a base where deployments are common. Renting rooms, Airbnb, etc can fetch a higher return net at the cost of turnover and be less passive unless that’s factored into the business model. Renting to families has greater potential for stability. Parents don’t want to move kids from nice schools, and even if the service member deploys the spouse might not want to leave their job. Plus that deployment income often keeps rent being paid on time. For some it even lengthens the number of years on a base and lead to another renewal on the lease.
@Ryan Pryor I’m going to go a bit against the grain. Depending on your job/specialty/rate, you could be looking at a couple of years of training. I would highly encourage you that while you’re figuring out how to do you job that you don’t add additional stress from a side gig like real estate. Once you know your job and have your military finances settled, then I would start looking at making the jump. That said, it’s 100% possible and keep learning as much about it as you can till the time is appropriate.

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.

We hate spam just as much as you