Understanding Military Rentals.
Updated: Oct 29, 2019
THE MOST IMPORTANT THING TO REMEMBER.
BAH stands for Basic Allowance For Housing: "The Basic Allowance for Housing (BAH) is a U.S. based allowance prescribed by geographic duty location, pay grade/rank, and dependency status. It provides uniformed Service members equitable housing compensation based on housing costs in local civilian housing markets within the United States when government quarters are not provided." (Source/BAH Calculator).
What does this mean?
It means that in strong military rental markets where on-base housing is not provided, a service member and their family will receive extra money to rent/buy a home, in addition to their paychecks. This amount varies based on the civilian housing market, which may be something that in the long run investors can control. BAH gets more generous with rank, meaning that you can actually set your homes up to fit certain criteria such as the type of ranked individuals you rent your property to. For example, the lowest-ranking members in the markets I operate in receive $840 (before taxes) as single service members and $1,041 (before taxes) when they have dependents, so generally, my rents will range from $750-$950 monthly. These rates are a dependable source of information for any investor young or old, who can buy a home at the right price. It's not uncommon to see 3 or 4 individuals bunk up and share a house to save money, most of the time I will encourage it to someone who is afraid to live on their own.
The Biggest Challenge?
There are usually A LOT of homes near military bases that are outdated and unlivable. This keeps the market price low and for the locals, it is a determinant when selling a home to some investors. After all, many of you are all about price point and numbers, but to the seller, an offer of $25K for a home worth $50K is not enough to pick up and start a new life somewhere else. I say connect with the local real estate agents or if you are really smart, go on craigslist and connect with the military members selling their homes. The biggest advantage of using Reunion Investments is that we have enough inventory to provide our clients with the opportunity to find exactly what they are looking for without having to negotiate prices with sellers who are worried about their livelihoods.
You may be thinking "this guy is just giving away his secrets?", unfortunately that is not the case, I see many of you on this site looking for deals in big cities and other properties that just aren't going to perform as well when the next crash happens (Biiiiiig Speculation), but in all honesty if your not investing in areas where the majority of the population collects a paycheck every month for the next 4-6 years without fear of a stock price or layoffs then your requests on forums seem a little pointless. Some of you who are vets may say "But bases close down too", TRUE! Bases do get shut down and if you chose a base with an obsolete mission then you must have not done your research. There will be plenty of warning before a base is set to close and in some cases, you may see those signs before the service members do, but that's all in the risk of being in this business. In conclusion the 1% of Americans who defend this country are some of the best renters I have ever worked with and many of you would be VERY well off if you had the opportunity too.