Military Real Estate Investing
There are those of us that are lucky enough to practice the art of Military Real Estate Investing. I say we are lucky because I think being a service member opens a lot of doors for great real estate investing!
We have access to the VA loan, a higher quality of tenants, and we are often forced to invest long-distance (yes, I believe this is a benefit)!
I am working on a video serious with a VA lender to discuss this in much more detail. As a military real estate investor, you can use the VA loan to buy a 1-4 unit home as your primary residence. You can do this without paying a single penny out of pocket! I call this strategy the VA house-hack.
Let me say that again, you can buy a four-plex without putting any money down!
The VA loan allows a young (or old) service member to get started in real estate investing without having a large amount of cash saved. This is one of the reasons that military real estate investing is so effective.
Best used in affordable markets, the VA house-hack will purchase up to four units, and allow your tenants to pay the mortgage. This will allow you to save a large portion of your basic allowance for housing (BAH) to build investment capital.
The military lifestyle requires you to move around every 2-3 years. This relocation has a lot of pros/cons but I think it is awesome!
Relocation forces you to familiarize yourself with different markets. Somebody born and raised in Hawaii, California, or New York might find real estate investing a daunting task, but if they were relocated to the mid-west it would seem much more feasible. Likewise, somebody born in the mid-west could be introduced to the hustle and bustle of large cities, and their market variances.
This increases your education and opens the door for you to pick the best market(s) to invest in.
Also, relocating allows you to utilize the VA loan more than once, and that is a great opportunity!
Military real estate investing often takes place outside of large military installations. This means that you will have a strong basis of military tenants. Military tenants are awesome because they are (generally) clean, and professional, in comparison to some of my non-military tenants. I know there are exceptions to this, but as a whole, I believe the military breeds some great tenants.
If they do turn out to be terrible, at least you're guaranteed rent! If they stop paying rent their command will simply dock it from their pay and give it to you directly. I'm not saying this to advocate being a jerk to service members, but I think this is a huge safety-net for the landlord!
One of the main things that people look to when analyzing a city is the economy. I'm here to tell you that I haven't been stationed anywhere yet where the large military installation didn't have an economy built around it. That means one of the largest metrics to analyze almost always receives a thumbs-up in the areas we relocate to!
Forced to Invest Long Distance
My friend David Greene wrote a book titled Long-Distance Real Estate Investing that is awesome!
Long-distance real estate investing is scary. I get that, but I think being forced to invest in real estate from a distance is a blessing!
When you house hack or live in the same town as your rentals it is easy to check on them. Even if you have a property manager you will be tempted to drive by them, talk to the tenants, look at what ugly plants they have outside, etc. That means you will, inevitably, be spending more time on your rental properties that necessary. It is just human nature to inspect what you own, and want to ensure things are going well.
Long-distance real estate investing FORCES you to have systems in place. You must have a solid property manager, realtor, lender, contractor, etc. because you aren't there to oversee the properties. That means you will be more diligent in the hiring process, and strive to build a team of rock-stars!
Check it out, having this team and being 6,000 miles away means that I physically CANNOT check on my real estate. As a result, I own truly passive real estate investments. The first 13 units I bought have only taken three hours of my time this quarter! Once a month I receive a report, and then I input the numbers into my accounting records. That is the only attention I pay to these deals!
I never would have been able to pay so little attention to these properties if I lived nearby. Thank goodness for systems, and long-distance military real estate investing!
Sometimes it is Better to Rent!
To be a solid real estate investor, you must know when not to invest.
This is not an easy concept, trust me, I know haha. I really wanted to buy a house in Hawaii, but I would have needed to commute almost an hour (each direction) to make it remotely worth-while.
The median home price here is ~$800,000 and the property might rent for ~$3,000-$3500…If you do the math there is no chance of a property like this being cash-flow positive.
As much as I wanted to purchase a house here, we ultimately decided to live in base housing. The most common investment strategy in an expensive market is to bank on the home value appreciating. This can be very rewarding, but since nobody can accurately predict the market I think of it as gambling more than investing!
The most important thing to remember here is to always buy your property as an investment, not a primary residence. If the numbers work, you're good to go!
I wrote an article on this if you want to read more details
Summary – Military REI
Military real estate investing involves a lot of unique strategies and tactics. If you use them correctly this could be a force multiplier!
The VA loan is a huge asset. Use it to purchase a cash-flowing property, like a house-hack.
Relocation, allows you to utilize the VA loan more than once and gives you the opportunity to experience new markets.
Military tenants are generally pretty awesome!
Long-distance real estate investing is fun and helps you create better systems.
Learn about these strategies, and take time to add them to your arsenal to become a successful military real estate investor!
Recommended Reading: learn the 8 things you must do to become a Military Millionaire