Real Estate Investing in Killeen

[Macori Walker]

Killeen looks like a great opportunity to invest in. Has anyone been investing here or interested in it?

[Joseph Cacciapaglia]

Killeen is like many other small markets that are largely dependent on 1-2 employers. You can often find deals with great numbers on the surface in these places. However, if one of those employers goes away or just scales back, you can quickly be underwater. I've seen a lot of investors get hurt in places like this. I got out of investing in college towns for this exact reason a few years back.

This is why I stick to major markets. The numbers aren't quite as good, but imho the risk adjusted returns are significantly better. For example, if Fort Hood closed or scaled back, Killeen would be devastated and you'd quickly be underwater with your properties. Compare that to when San Antonio lost Kelly AFB in the late 90's early 00's. Sure it had an impact, but the city was able to absorb that and keep moving. 

When I bring up base closings, a lot of people think this isn't a real risk. However, over 350 bases have been closed since the late 80's, and in recent years there has been a push for another round of BRAC. For Hood employs more than 10 times as many people as the next largest employer in the city, so if that ever did happen, there is little chance the area would survive. Even if they decided to cut their workforce by 10%, that would be equivalent of losing the second largest employer in the market.