Seeking Advice: Investing in Twentynine Palms, CA as Military

[Kevin Ferguson]

I'm new to real estate and have decided to dive in now that I've finished college and have a steady income (and low enough expenses) to support it.

The area seems very small, so I hope there are individuals who are familiar with Twentynine Palms and its surrounding areas (Joshua Tree, Yucca Valley, etc.) who wouldn't mind sharing their thoughts on the following.

From my understanding, the first step for finding a rental property is to get in contact with a quality agent, then analyze the properties that fit your search criteria (Please tell me if I'm missing some important step, like getting preapproved for a loan or something).

Questions:

• For those with experience in the area, how have you faired with your investments? Would you recommend the area to a new investor?
• Are there any specific agents that you'd recommend going through?
• Any agencies you recommend avoiding completely (I've read some mixed reviews online about some local agencies)?
• Any other advice about investing in the desert in general? Any uncommon things to look for in properties specific to the desert?

My knowledge on real estate is limited given that I'm a newbie, but I figure its always better to jump in head first and correct mistakes along the way rather than wait until I think I'm completely ready.

I'm very eager to begin investing, but am unfamiliar with this market. At the surface level, it looks like it would be a good place to invest, given the nearby location of the military base.

Thanks in advance!

[Kevin Hunter]

As a current active duty military member who buys a house at every duty station I will give you my two cents. First, get to know the BAH rates. Who do you intend to rent to? Are you looking for two or three E-4s or E-5s to rent your place or do you want an E-7 or O-3 family. Once you determine who you want to rent to after you leave, then you can start to work your numbers. One thing that is really nice about this method is it takes a lot of the emotion out of the deal very early on.

After you identify your target renter, look at the market and where you want to find a property. That will be driven by what commute people are willing to make and what commute you think your tenants will be willing to make. During this step, I would also reach out to folks at the base that you are joining. Ask them where the (insert your desired rank here) are living.

Once you identify your target area, start running the rental comps. Figure out what the average rent price is per bedroom, or square foot, to understand what Marines in the area are paying for housing. Keep in mind that there will be variables which will affect this number, i.e.: garage, yard, pool, etc... You can also reach out to a property manager for this step. I would avoid asking your real estate agent as they can be conflicted. Reach out to a property manager that you get recommended from BP and ask them how much you can assume to get in rent.

Now that you have identified the the best area to purchase, and rent comps in that particular area, you can work your numbers backward to figure out what you can spend in order to get into that area and still maintain your goals on the backside. You need to factor in a monthly property management fee. Even if you can't possibly imagine needing a PM, plan for it. It will cost you 8-10% of that monthly rent. Capital expenses are a big one that people usually forget. Plan for 10%. Does 29P require an owner to pay any utilities? If so, factor that in.

Now that you have identified your target renter, target area, figured out what the rental comps will be, and worked your numbers backward to figure out what you can pay, you can start shopping for properties in that price range. 

Good luck. Feel free to reach out for any further discussion.