Plan of Action - Military and Long Distance Real Estate

[Andrew Major]

From my post before, I described how I will be in and out, then finally deploying for 9 months.  I am currently in Fort Drum, NY.  You all had some good feedback, and this is what I finally came up with. This plan will keep me accountable and to not fall into a analysis paralysis. Tell me what you think!  Thanks

Game Plan:

While on deployment/if possible (between my partner in Delaware and I), we will both be doing market research.  We will be focusing on Bethlehem, PA as we are interested in this market.  I will also be researching Watertown, NY and surrounding areas.  During our analysis phase we will assemble a team of property managers, lawyers, and handymen. At the end of my deployment I will have about $50,000.  

At 6-8 months, my partner and I will be buying one multifamily in Bethlehem, utilizing a property manager for the long distance. This most likely will be a buy and hold, possibly BRRRR. We will have a strict lease, and develop it with a lawyer, property manager, and here on BP. I will also be buying a multifamily in Fort Drum, NY as I will have 2 years left. It will be a buy and hold that I self manage, and depending on my situation later on I will sell or get a property manager. By the end of my contract I expect to have a capital of $115,000 to utilize plus my VA loan. I plan to get 2-3 more multifamily houses in Bethlehem during my contract.

[David Ribardo]

@Andrew Major Chiming in here - former Army, my first rental property is in Fort Benning, Georgia, and I learned a lot of lessons turning a distressed portfolio into a performing one at lovely Fort Polk, Louisiana. 

It sounds like you have a solid approach and have definitely done your homework. I definitely recommend utilizing your VA loan at your earliest opportunity to owner-occupy, it's awesome to be able to buy a house with no money out of pocket. I did this for one of my former SFHs - bought it with zero down (full seller assist), put about 3 weeks worth of work and $5k into renovations, lived in it for two and a half years, and sold it for a tax-free $35,000 profit. It was intended to be a SFH rental, but when they sent one of the Brigades away, 3500 families went "poof" and market rents dropped 30%. I bailed out by selling it, but still made a profit since I bought low. Sticking to the larger "joint bases" and having multiple exit strategies will help protect you from this happening.

Most of my clients are out of state investors, and the ones that have self-managed have had mixed results. Some worked through the growing pains and are saving themselves that 10%. On the flip side, all it takes is one contractor taking advantage of your absentee status, and you could lose more money than a years worth of the property managers cost. I live here in the Lehigh Valley and still use a property manager for my rentals - I know what my time is worth, and that frees me up to do the important tasks for my business.

Lastly - if you are looking in Bethlehem / the Lehigh Valley, don't forget about the SFH market. You can typically buy SFH's here at slightly better cap rates. The 2-4 unit multi market is flooded with new investors getting into the game, agents that don't understand investing, and limited inventory - thus those deals have dried up significantly over the past two years.

Best of luck, and I hope you have a good deployment!