Housing Options near Military Bases

[John Y.]

Hello BP,

Not having much knowledge of military housing and whether or not most live on base, I am curious as to the performance of investments (buy and holds or rehabs) in and around military bases. Do you guys see the same trends as you would near universities but on a less frequent occurrence? Is it primarily a renters environment or are there opportunities to flip some houses for first time home buyers?

Any information, lessons learned, and foresight is much appreciated!

[Kerry Baird]

There are a few of us who are military and have developed a little niche in this arena.  I'm Air Force, so I will use what I know.

Right near the gates of military bases, you often see pawn shops, used car lots, and payday loan places.  So, vetting the neighborhood is still very important.  The local Housing Office (on base) will often have a list of houses located in areas that are in demand.  I set my parameters like this:  I like brick houses if possible (less maintenance), 

I don't shoot for the one General or Colonel at the top of the employee pyramid, but to the broader mid-rank tiers below.  

I set my rental rates based upon the BAH .  This is the going rate for the local housing allowance. Newer 3 bed 2 bath houses are flexible for use by military or civilians, and encourages a more established tenant than the 18 year old single airman, sailor, soldier. 

Some bases will not allow the younger airmen to move off base, unless they are married, and you need to inquire about what the Housing Office finds most demand for, and then aim to meet that demand.  It is very likely that you will find the same demand across the civilian demographic, too, for example teachers, policemen, firemen.  Or young professionals, if you are going a little bit higher.

While I enjoy having military for tenants, I do not *only* rent to military.  We've got property management in place, and market to the universe, and screen tightly, just like with any other group.  The down sides, as I have experienced, is that deployments can take your tenant away for six months or more, and the lawn may suffer.  You could include yard care, and bump your rent up accordingly, to mitigate this.  Also, we've gotten short-notice orders to deploy or to relocate.  It happens.  Look up SCRA, the Servicemembers Relief Act, as it sets out what you can and cannot do, in terms of evictions. Here is an overview:  SCRA.

I'm sure others will chime in.  We have military tenants who are on longer orders (4 years) due to teaching positions at training bases...that longevity is much appreciated.  We've had a season where the base shortened a training course, so that we no longer catered to the student airmen (6 months, rather than the year we had before).  Our tenants have been trained to pay attention to detail, and they often take good care of the property.  And we consider that we can contact the chain of command if we have major damage.  

Not related to the military, but to the area in which we bought: we bought assuming no appreciation, but they hit oil in the local area.  So our housing prices went up, and tenants started to come from the oil patch.  Once the oil went out of favor, we lost a number of tenants.  Diversity in a marketplace is a very good thing.  You want a location that has a wide variety of employment!  If Congress decides to shut a base, a small community would be decimated, while a large city will still feel the impact.  To my way of thinking, JOBS are the pinnacle of attributes I look for.

All the best~