What and where do military service members invest in?

Question

As an active duty military service member, one of the challenges I face as an investor is that I normally move every 2-3 years. Because of this, I've always been hesitant to buy and hold actual property, and have instead chosen to focus on mortgage notes in Texas because I feel that they are the easiest to manage as an "out of town" investor.

That being said, I'm curious where other military investors are choosing to invest, and what platform they are choosing. And why?

Joel W. · Answer

I've done exactly what @Jacob Elbe has done. We began doing long distance investing last year in a single location. Luckily I just received orders to that location, so now I can go and manage some of those and add to my portfolio. But on that I am also very interested in investing in notes.

Stuart Grazier · Answer

Thanks for the reply @Jay Raught. Yes, I currently own performing notes in DFW. I have bought and sold them to other investors as well. I'm open to other areas, but I have chosen DFW because that is where most of my network is, and I know the area. I've heard of Scott Carson, but have never worked with him. I'm not sure non-performing notes are as good of a platform for me, but I'm always open to learning new strategies, especially if they offer higher yields.

Cheers.

Kerry Baird · Answer

We have purchased 18 houses over the years, all of them near Air Force bases where we were stationed, and I'm a partner in 10 more that are located in a small Texas town with an AF base.  Some of these were fix and flips, some were long term rentals.  Additionally, we bought two owner-occupied houses in England that we improved over the course of our tour, and sold at the end.

We knew the local market rent was in line with the BAH or OHA for that area, and we perceived that while there would be one base Commander, there was a wide tier of E-4 to E-5s, and to a lesser extend O-1 to O-3s.  So we aimed for the wide tier when we purchased, and of course we rent to anyone who qualifies, whether they are active duty or not.  There are many support personnel, in addition to the regular population of the area, so our tenant base has been vibrant.  We also would cross-check with the Housing Office on base for areas that were in demand for rentals.

While we did buy a number of low priced houses in the Oil Patch, expecting them not to go up, they did double.  Rents went up, and now rents are going down, as are values.  We didn't count on oil.  In hindsight, I would buy in a steady state type of market, not a rolling market.

Scott Carson · Answer

Hi @Stuart Grazier   and thanks @Jay Raught   Its not that hard to invest in NPN's outside of your market due to there being so many other investors/groups/professionals that you can use to help you with your business.  Servicing companies will help you manage the outreach and servicing of the notes along with door knockers etc.  You can find realtors to do drive by's via a BPO/ActiveRain.com/ or Zillow.  And there is always a wealth of experts in BP, Meetup.com groups, and other REIAclubs.   And depending on the market, we are putting together around 40-50 note specific Meetup groups for investors just like yourself to network and connect with like minded individuals.

We also are big fans of the military and we comp any past or present military into our workshops.  I'll drop you a DM with more info.

Jay Raught · Answer

Performing notes are good for the IRA's.  NPN is where the big $$ comes!!!!  Good luck.

Jacob Elbe · Answer

@Stuart Grazier, Welcome to BP!

I noticed the same thing when I was stationed in the Netherlands in 2011.  Anywhere I bought was going to become an out of state rental as soon as I PCSd again.  So I spent some time researching cash flow markets and made the decision to invest where the cash flow worked instead of focusing on areas I was familiar with.  Some more research revealed there were a number of investors having success investing completely out of state and I figured I could do it too!  So I started with a couple of turnkey properties out of state and have grown from there.

So now we (TNPS = my brother and I) own 15 units in MS, OH, and IN that are all buy and hold rentals.  Our focus is on OH and IN where we have a professional team on the ground that manages the properties and handles most of the headaches.  These markets also provide solid cash flow and better returns than we've found elsewhere so far.  As long as we continue to find deals in these markets we'll likely continue to invest here now that we have established teams on the ground.  We started with turnkey because it was the easiest way to get started in a market.  Now we buy a mix of turnkey and rehabs and are even doing full out of state flips.  It's all in an effort to grow our personal portfolios and hit the highest returns we can while we're still in a growth phase.  It's also because this is now the area I'm familiar with.

A lot of military folks preach buying a property everywhere you're stationed, but I think that's a dangerous formula in many markets.  If a property won't cash flow as a rental next time you PCS, then it may not be a good place to buy.  Too many folks get stuck with a negative cashflowing property or have to take a huge loss on a sale because they followed that advice.  So instead we recommend investing where it makes sense and forget about whether it's local or not.

Jay Raught · Answer

Good choice @Stuart Grazier.  I choose notes also. A much better choice than physical property in my opinion.  I prefer being the bank. Have you bought any notes as of yet?  Do you have an interest in places other than TX. Since you are military check out what Scott Carson has to offer. He takes care of the military!! I am former military and I own notes in TX and other areas.

What and where do military service members invest in?

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