Taking the Plunge into REI While in the Military

So you have been serving your country faithfully over the years and have heard about or started reading more about real estate investing and how powerful of a tool it can be for your future - what is the next step?  Below I will attempt to help answer some of those questions from my background as an investor and active duty military member.

1). Your Job is Top Priority - Always!   -  While you explore how you want to start your career in real estate investing do not be the person that starts neglecting your job.  We have voluntarily signed up to be apart of the best military in the world and with that come many sacrifices.  A few different military folks have talked about this in podcasts, but it is good to mention again.

2). Military Situations are Unique From the Average Investor - As you explore BP more, you will see a plethora of opinions and advice on how to go about starting in real estate investing.  The problem with a lot of this advice is it comes from those that hold normal jobs and aren't accustomed to the rigors of military life.  Let's look at a few of those items now:

      A. Uncertain Time in Any Given Location- For the majority of the military community we are only in a given place for 2-3 years at a time (many times less for Officers).  This has a dramatic effect on how we will choose to invest and what options we have!  The majority of the posters on BPs are not military, so they give generic advice that many times doesn't apply to us - not to their discredit, but we need to understand the unique challenges our community faces.

      B. Ability to Choose Housing Situation - Another thing to consider is do you have the ability to choose where you live at a given location?  As an Officer you will most likely have the option of living on or off post (thus giving you the ability to buy a house if you desire).  However, if you a lower enlisted Soldier (rank E4 and below), you may be forced to live on post, or in the barracks.  If that is the case for you, you will not be able to take advantage of investing with little money down (live in opportunities).  What other community in the United States today does not have the option to live where they want?  Again, the military has its unique challenges! 

     C. Deployments and Extended Periods Away From Home - While serving we often times are called on to leave our primary residence to go fight for our freedom; no matter what service you are in, it is likely you have experienced extended periods away from your loved ones and where you are stationed.  This is something else that the common investor doesn't consider on most of the posts I have read.  For example, most people think that landlording your property yourself is the best option in ANY situation.  For us, it may not be the best option if we are consistently having to leave.  This is just one more example of why our strategy has to be different than the majority.

     D. Housing Markets - The places we live offer advantages and disadvantages that the general population doesn't normally deal with.  A military community surrounding a base brings in a whole new set of parameters we have to look at prior to investing.  For example, is the community near a large city? Is the base looking to add more units in the future?  Are there any signs that the base may be closed in the near/mid term?  What is the current market for rentals available to those needing housing?  Dont' get me wrong, each market has its unique challenges, but there are many other interesting ones we have to consider when looking for opportunities around military bases.

3). Read, Research, Reach-out, Invest! (RRRI) - I know my acronym is not as sexy as @Brandon Turner , however, it holds true.  Before we really know we want to start into real estate investing we likely read something or maybe someone refers us to Bigger Pockets (the best option).  We start reading and getting more interested - maybe this could work for me?  We then go into my favorite aspect of this which is research.  We dig into books, websites, anything we can get our hands on that talks about the PROs and CONs of real estate investing - trying desperately to figure out how you can get your foot in the door.  The next step is of utmost importance - Reach-Out!  The easiest place to do that is on, wait for it, Bigger Pockets!  The resources and people available who legitimately want to help you are everywhere.  The other place you need to reach out is within the military community where you are stationed. Most likely there is a local REI club that is meeting up somewhere and discussing the opportunities in the local area - if there isn't already get on BP and get one started!

4), Investment Options While Living in Uncertain Times - How can we as military invest smartly in REI while constantly moving around, deploying, and attending training around the globe?  I'm glad you asked, there are many viable options out there for us to take advantage of, the most promising in my mind are summarized below:

     A). Owner Occupy and Rent Once you PCS - As a military member you have the unique advantage of utilizing the VA loan - more specifically getting into your house for zero money down on favorable terms with no PMI.  The best way to capitalize on this option is to find a house in need of cosmetic work, or a place that just hasn't been updated in a few decades.    You can buy for a huge discount and rehab it while you live in it and then rent it out with good cash flow once you leave.

     B). Flip - Once you get to know your area a little better you can buy houses that are in dire need of updating/repair.  You can then rehab and turn around and make a lot of money.    This strategy takes a good team of people working with you: lenders, contractors, agents, attorneys, etc.  Not a good strategy for a new investor, but can really help gain capital quick once you understand the strategy better (reference BPs if you want to learn more about this very lucrative strategy for investing). 

     C). BRRRR (Buy, Rehab, Rent, Refinance, Repeat) - Another solid method for investing, which you often hear about being talked about by BP VP Brandon Turner.  Similar to the flip, but with a hold mentality.  In both the BRRRR and the Flip you are most likely going to need cash (as a bank generally won't finance a distressed property).  In this method you are buying a distressed property and rehabbing it (this is where we go in a different direction from the flip), then instead of selling (flipping), you rent it out establishing good cash flow.  Once the previous steps have been taken you can go to your bank and refinance your property through a conventional lender (vice hard money) over 30 years or whatever term you decide on.  This loan is based on the ARV (after repair value) of your house.  At this point you can repay your hard money lender, and repeat on another property . If that is at all confusing please reference BP to learn more.