Real estate investors, particularly first-timers, often wonder whether buying rental homes near military bases is a wise strategy? The answer is a resounding “Yes.” Here is why it’s a good idea.


Reasons to Invest in Rental Properties Near Military Bases

There are multiple reasons to buy rental homes or apartments in close proximity to US military bases, including the following.

·       Always remember the three most vital rules of real estate: Location, location, and location.

Military bases tend to spur a significant “rental culture” that reflects the rather frequent movement of active military personnel. In most cases, buying homes, to a large extent, is an added burden for military families, since they typically move up to 10 times more often than other families. This statistic makes it more difficult for military personnel to enjoy all the “perks” of home ownership, tax-deferred gains in home value and larger income tax deductions (for mortgage interest and property taxes paid).

·       Supply and demand 101:

Basic economics rules tell us that strong markets tend to depend on matching the supply of products with the demand for those products. When the supply of something is greater than the demand, the product price will decrease. However, if the demand outstrips the supply, the price increases.

Military families typically favor rental residences near their bases to enjoy some of the perks of suburban home ownership without the commitment involved in owning residential property. Renting a single-family home or townhouse delivers a sense of community and security many military families crave.

·       The Basic Housing Allowance (BHA) may guarantee a stream of qualified tenants:

The US military helps its personnel find acceptable housing options with a BHA. This stipend helps service members meet their housing expenses. But, this also assists rental homeowners find qualified tenants now and in the future.

The military calculates the amount of BHA using a formula that incorporates local rental housing prices, the person’s rank, and the service member’s number of dependents. For military bases without on- or convenient off-base government housing options, the BHA is consistent with the local consumer prices for housing.

Investors, who price their rentals at the local market standard, typically are ensured that they will enjoy a qualified “pool” of potential tenants who can afford their properties. Can you think of a better plan to keep the vacancy rate, which is expensive, consistently low? Probably not.

Rental property owners can learn about the local housing market by simply following the advertising for other rental homes and townhouses in the city, county, and local area. Homeowners will become knowledgeable about the local economy and their “competition” for affordable, comparable rentals in proximity to their local military base.  Remember, “knowledge is power.

Compare more than monthly rental prices, however. Analyze the neighborhood, rental property, and local school system, all of which are important to most service members with young and growing families. Similar to most consumer product profitability, pricing your monthly rentals in accordance with current market standards should keep your cash flow strong and consistent.