The Deployment Hack Explained
Last week I was recording a podcast with Joe Alvarez (Episode 11) and we coined the phrase deployment hack. This hack could earn you thousands of dollars if done properly!
We all know the military lifestyle is not always the easiest. Sometimes, you get sent away for months on end. I spent seven months in Afghanistan, and they still do six-month deployments here and there.
Sometimes you can go somewhere for a year, unaccompanied. In some cases can even get stationed somewhere unaccompanied for two years, like Okinawa.
The reason and time may change, but we know there are times that we will have to be away from loved ones and our home.
The Silver Lining
You can make this separation one of the best financial things that happen to us? The Deployment Hack!
so what is the deployment hack?
Single Service Member Deployment Hack
There are a couple of different strategies that can be used. The first one is for a single service member who owns a house off base.
For sake of example, we’ll say Jacksonville, North Carolina. Let’s imagine you’re stationed at Camp Lejeune and you own a house. The mortgage is $800 a month. The basic allowance for housing (BAH) is $1100 a month.
One day you get told that you’re deploying for six months, so you can:
A. Keep your Bah, keep paying off your mortgage while you’re gone for six months, no big deal.
B. You can use the Deployment Hack to build more wealth. Instead of leaving your house as-is, you rent it for the six months you’re gone. Now your mortgage is being paid by your tenant, and you are still receiving BAH.
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Let’s say you rent the house for $900 a month, on a 6-month lease. While You’re still collecting BAH while they are paying your mortgage for you!
For the entire deployment, you earn $900/month in rent, and $1100/month in BAH…all the while only paying an $800 mortgage! renting the property just earned you an additional $5,400 while you were deployed!
Sure, taking all of your stuff out of the house is kind of a pain. However, when you rent it to somebody for six months, boom, money in your pocket!
Married Service Member Deployment Hack
This strategy may involve a little bit more, uh, convincing (of your spouse). This is the strategy I would use if I got deployed for 6-months to a year.
I currently live in Hawaii. I’m married, I have two kids and we live in our house and right now. I live in base housing. But let’s say that I lived out in town and owned my house.
Now I could send my family home back home and they could live with her parents, or they in our house on the mainland, or they could even rent a place, whatever.
My housing allowance here in Hawaii, is around $3,000 a month. And by getting deployed, I will continue receiving my current BAH plus any additional deployment pay. However, now we aren’t giving our BAH to base housing every month.
In theory, we could pocket our $3,000 a month BAH and Bada Bing, Bada boom, we have a little extra money in the pocket!
We currently live in base housing, and an even simpler strategy would be to there a return in my house when I deploy. Can you imagine how much money could be saved if we no longer had any BAH payment while I was gone for 6-months?
Again, maybe my family rents somewhere for 500, 600 bucks a month in Missouri. My housing allowance out here is still $3,000 a month. That is a very large difference!
“Deployment Hack” Your Relocation!
I’m due to rotate back to the mainland this summer from Hawaii. What if my family went home three months prior to my leaving the island? If I paid a friend $1,000 to crash at his house/apartment for three months? I could move out of base housing and pocket the rest of my BAH. Over the next three months, we could make $6,000 just for my family rotating home early!
Crashing with a friend for 3-months is not a bad way to earn $6,000!
There are several ways to make this strategy work to your advantage. Leaving your family behind for a few months sucks, but the deployment hack could make it a little more worthwhile.
There are a couple of different ways to use the deployment hack strategy, but My favorite is the one where you rent your house out and keep getting your Bah for the whole time you’re gone.
That is simple, and absolutely brilliant!
My friend Joe Alvarez did this and we coined the phrase “Deployment Hacking” on the podcast. This is a difficult, but powerful strategy!
By using this strategy you could be receiving your housing allowance and rent for the same property. You could literally double your housing allowance, and still own the property!
This is another example of how thinking outside the box can pay dividends for real estate investors. We didn’t even mention that you will receive separations pay ($250/month) if you’re gone for more than 30 days. There are also a lot of tax benefits for real deployments!
Check out this article about Military real estate investing
More about house hacking strategies here!